Preamble

The House met at half-past Two o'clock

PRAYERS

[MR. SPEAKER in the Chair]

PRIVATE BUSINESS

GREATER LONDON COUNCIL (GENERAL POWERS) (NO. 2) BILL (By Order)

Order for consideration, as amended, read.

To be considered upon Thursday 18 December.

BRITISH RAILWAYS BILL (By Order)

Order for consideration, as amended, read.

To be considered upon Tuesday 16 December.

GREATER MANCHESTER BILL [Lords] (By Order)

Order for Second Reading read.

To be read a Second time upon Thursday 18 December.

Oral Answers to Questions — National Finance

Coinage

Mr. Greville Janner: asked the Chancellor of the Exchequer whether he will now introduce a £1 coin.

The Minister of State, Treasury (Mr. Peter Rees): The possibility of introducing a £1 coin has been considered, but no decision has been reached.

Mr. Janner: As the value of the pound has dropped by nearly 75 per cent. since the 50p coin was introduced, can the Minister at least assure the House that the Government are considering the various possibilities for £1 coins and the size and shape that they will have when they are introduced?

Mr. Rees: As I indicated, the Government are certainly considering the possibility. They will consider closely the size, shape and, indeed, the weight, which is an important consideration for users.

Mr. Waller: Will my hon. and learned Friend consider the advantages of bringing in a new tier of currency involving 20p, 50p and £1 coins? Does he agree that that would get rid of the present unpopular 50p piece and introduce a new 20p piece, which would be for the convenience of many people?

Mr. Rees: I am not sure how unpopular the 50p piece is. The need for an intermediate coin was recognised by the Decimal Currency Board. We shall certainly bear it in mind.

Interest Rates

Mr. Sheerman: asked the Chancellor of the Exchequer if, having particular regard to the position of industry in West Yorkshire, he will immediately seek further to reduce interest rates.

The Chief Secretary to the Treasury (Mr. John Biffen): I am fully aware of the problems which high interest rates have caused for industry in West Yorkshire and elsewhere. The minimum lending rate was cut by two points on 24 November. Further changes will take place as and when economic circumstances indicate.

Mr. Sheerman: Is the Chief Secretary aware that industrialists in West Yorkshire and elsewhere are in such grave difficulties that the 2 per cent. cut is almost an insult to their intelligence? Is he aware that they have for a long time struggled against the strength of the pound in the exporting centre of Britain and that they cannot manage for much longer unless they have help from the Government?

Mr. Biffen: I do not believe that the 2 per cent. cut is an insult to the intelligence of business men in West Yorkshire or elsewhere. Any future reductions in the minimum lending rate will be widely welcomed in the business community.

Mr. Richard Wainwright: Does the Chief Secretary realise that in view of the Government's known doctrinal approach business men do not know whether the next move in MLR will be up or down? In order to give them a basis for their business planning, will he issue a revised version of the Government's financial strategy?

Mr. Biffen: No. I think that the business men of West Yorkshire are a damned sight more shrewd than the hon. Gentleman suggests.

Mr. Speaker: Order. I do not like that sort of language here.

Manufacturing Industry

Mr. Campbell-Savours: asked the Chancellor of the Exchequer which measures in his statement of 24 November will most benefit manufacturing industry.

The Chancellor of the Exchequer (Sir Geoffrey Howe): The two percentage point reduction in the minimum lending rate.

Mr. Campbell-Savours: Within the boundaries of a monetarism which is characterised by soaring Government borrowing and a money supply figure which is out of relationship with what the Government want, does the Chancellor accept the need to restore output and demand in the economy? Is not that the root of the problem which has put nearly 1 million people out of work in the last 18 months.?

Sir Geoffrey Howe: The hon. Gentleman must understand, as more people are coming to understand, chat the way to restore the health of our economy is not by the Government seeking to reflate demand and generate a false surge of output in that way. The reduction of inflation, to which the Government are committed, and the other changes in the fiscal system are the right methods of securing a healthy and sustainable growth in output.

Mr. Eggar: Are the figures in the medium-term financial strategy achievable in the light of my right hon.


and learned Friend's announcement on 24 November? If not, when may we expect a re-basing of the sterling M3 and PSBR monetary targets?

Sir Geoffrey Howe: My hon. Friend will recall that at the time of my statement on 24 November I said that I should be considering and making announcements about the monetary target at the time of the Budget, when I shall also make announcements about the prospective size of the borrowing requirement next year.

Mr. Woolmer: Why did the Chancellor on 24 November seek to give the misleading impression that he was increasing Government tax revenues from North Sea oil and gas by £1 billion on top of the levels previously forecast, saying that there was
scope for a further increase in oil taxation"? — [Official Report, 24 November 1980; Vol. 994, c. 317.]
Why did not the right hon. and learned Gentleman tell the House that his own private forecast was that those revenues would be £1 billion short next year unless he took action? Is not the Chancellor giving the distinct impression that, on top of the employers' national insurance contributions chaos, either his budgetary policies are in chaos or he does not know what is going on?

Sir Geoffrey Howe: The hon. Gentleman gives me an opportunity to correct at once the entirely false report on the front page of today's issue of The Times to the effect that the position about the yield from North Sea oil was not fully presented to the House on 24 November. He will recall that I said in my statement that the changes proposed in the oil tax regime would
together yield around £1 billion in 1981–82, mostly from the new tax."—[Official Report, 24 November 1980; Vol. 994, c. 317.]
The hon. Gentleman will also recollect that the forecast published on the same day, and republished in the Economic Progress Report Supplement for December, made perfectly clear that
After taking account of the proposed tax changes announced on 24 November, revenues from North Sea oil and gas in 1981–82 are expected to be in the range of £4½-5 billion, a little higher than forecast at the time of the Budget.
It was made absolutely clear that the new tax revenues were being taken into account in the figures set out plainly in the forecast.

Mr. Budgen: In view of the money supply figures for the past two months, will my right hon. and learned Friend explain the technical, as opposed to the political, arguments for reducing minimum lending rate by 2 per cent. without there being compensating and contemporaneous cuts in public expenditure and increases in taxation?

Sir Geoffrey Howe: I explained to the House as well as to my hon. Friend that the well-justified reasons for the welcome reduction in minimum lending rate were, first, the prospect of declining monetary growth, particularly when the public sector moves into surplus in the new year, and, secondly, the fact that the inflation rate has been coming down and is continuing to come down very sharply, so that the real rate of interest has been rising at the same time. In those circumstances, for monetary and other reasons, I have no doubt about the justification for the reduction in MLR.

Mr. Shore: Following the Chancellor's initial reply that he thought that the benefit of his measures was embodied in the reduction of MLR by 2 per cent., does he

really think that that is a satisfactory move, taking account of the plight of British manufacturing industry and the fact that in his own forecasts introduced at the same time as his mini-budget he expected a further fall in manufacturing output next year of another 5 per cent.? Does not that suggest to the Chancellor something far more dramatic—that the basic problem is indeed a lack of effective demand in the economy? Will he not be concerned with the kind of points made by his hon. Friend the Member for Wolverhampton, South-West (Mr. Budgen) about whether he is achieving or under-achieving his so-called money supply targets? In our view, these are matters which are totally irrelevant to the successful management of the economy.

Sir Geoffrey Howe: May I take the opportunity of welcoming the right hon. Gentleman to his new Shadow portfolio and wish him a long tenure of that role?
It is plain from what the right hon. Gentleman said that he intends to signal a change of management, since he has taken the first opportunity to discard the respect for monetary policy which was at least the one hallmark of his predecessor. That is a signal of economic and financial irresponsibility.
The answer to the point specifically raised by the right hon. Gentleman cannot be repeated too often. We are not likely to succeed in restoring the health of our economy if we continue to deceive ourselves that we can do so by expanding demand within the United Kingdom. The crucial cause of declining prosperity in this country has been the continuing loss of competitiveness by British industry, attributing itself far more to high and rising wage costs than to any other cause. The right hon. Gentleman must cease deceiving himself in looking for an increase in demand as the right economic prescription.

Mr. Shore: The Chancellor is absolutely right in what he attributes to me as my attitude towards monetary policy. But what the House would like to know in the light of the Chief Secretary's speech to Conservative Back Benchers yesterday is whether the Government themselves have at last seen sense and are prepared to abandon their obsession with money supply targets.

Sir Geoffrey Howe: The Government are united in their determination not to follow the right hon. Gentleman down the path of economic irresponsibility.

Value Added Tax

Mr. Dubs: asked the Chancellor of the Exchequer what was the average recovery in under-declared value added tax achieved in the most recent year by Customs and Excise control visits to large business organisations.

Mr. Peter Rees: Precise information is not readily obtainable. In broad terms, however, Customs and Excise identified, on average, about £1,000 additional VAT per control visit to the larger businesses in 1979, compared with an overall average of about £200.

Mr. Dubs: Does not that figure show the incompetence of the Government's housekeeping? Does not the hon. and learned Gentleman agree that if Customs and Excise visits to large organisations can yield an income to the Revenue of £1,000 per visit it is the height of folly to cut staff, because the consequence will be a net loss of money?

Mr. Rees: No doubt the hon. Gentleman is in sympathy with the aspirations of the Society of Civil and


Public Servants Although it is pressing for 1,000 extra VAT control officers, it recognises that, despite the moral justification for seeking to eliminate tax evasion completely, there must be a threshold on the level of control beyond which extra staff would be non-productive and uneconomic.

Inflation

Mr. Parry: asked the Chancellor of the Exchequer when he expects the inflation rate to return to single figures.

Mr. Biffen: As I indicated in reply to a similar question from the hon. Gentleman on 6 November, inflation is falling, but I do not wish to anticipate when the rate of inflation will, reach single figures.

Mr. Parry: If the Chancellor does not know when he will reduce inflation to the level that he inherited from the Labour Government more than 20 months ago, can the right hon. Gentleman at least explain how he expects employees of the National Health Service and local authorities to accept an increase of 6 per cent. when inflation is more than two and a half times that level and probably will increase next year?

Mr. Biffen: The cash limits for local authorities, which contain a pay factor of 6 per cent., are deemed to be consistent with a prudent public expenditure policy. The hon. Gentleman may like to reflect that there was a time when pay increases of that sort could be secured against a background of much lower inflation.

Mr. Archie Hamilton: Does not my right hon. Friend accept that one of the main factors leading to the lower rate of inflation is the strength of the pound, which has led to cheaper raw materials and other imports?

Mr. Biffen: That is undoubtedly so. In particular, the strength of the pound can be reflected in the wholesale price index, which suggest that the trend in retail prices can be continued in an advantageous direction for some time to come.

Mr. Jay: Cannot the Chancellor justifiably claim one unique record of having inflated the money supply, the borrowing requirement and unemployment all at the same time?

Mr. Biffen: I have no doubt that those three indicators will be in such a relationship that we shall fight the next election in good heart.

Mr. Latham: While the decline in inflation is obviously very welcome, will my right hon. Friend confirm that one of the main factors; still affecting inflation is price increases imposed by nationalised industries, and that we expect those industries to absorb increases as much as they can and not simply pass them on?

Mr. Biffen: I can confirm both parts of my hon. Friend's question.

European Community Funding

Sir Anthony Meyer: asked the Chancellor of the Exchequer whether United Kingdom applications for European Economic Community funding now correspond with the sums available under the revised European Economic Community budget arrangements negotiated by the Prime Minister.

Sir Geoffrey Howe: Yes, Sir. Expenditure on the programmes for which the Government have invited Community support is more than sufficient to cover the refunds to which the United Kingdom is estimated to be entitled under the 30 May agreement.

Sir Anthony Meyer: Is my right hon. and learned Friend aware that that reply will satisfactorily answer allegations that the Government are prejudicing their chances of getting a full refund by dogmatic opposition to increases in the total EEC budget?

Sir Geoffrey Howe: I am glad to confirm my hon. Friend's point.

Mr. Spearing: Why have not the Government published the applications of the programmes to which the Chancellor has referred? When will the Government announce what the Commission or Council has decided to do with our money?

Sir Geoffrey Howe: As soon as the decisions have been taken, they will be announced. I can assure the hon. Gentleman that the agreement of 30 May will be fulfilled.

National Insurance

Mr. Cryer: asked the Chancellor of the Exchequer what representations he has received regarding the recent national insurance surcharges which be announced on Monday 24 November.

Sir Geoffrey Howe: I have received representations from three bodies and a larger number from individuals and businesses about the effects on employers of the changes in national insurance contributions.

Mr. Cryer: Is it not true that the representations have been concerned, in common with representations from Labour Benches, with the enormous loss of jobs caused by the insurance charges? Does not the speech of the Chief Secretary, in which he said that the Government should be more flexible about public borrowing and money targets to combat the grave recession, mean that the Chief Secretary at least recognises that the Government's monetary and borrowing targets are a combination of disastrous catastrophe for the manufacturing sector?

Sir Geoffrey Howe: If the hon. Gentleman believes that, he will believe anything. My right hon. Friend is devoted, as are the Government, to the reduction of the undue burden of public sector borrowing and the achievement of monetary control. The increases in national insurance surcharges as part of the national insurance contribution changes are a necessary part of putting the public sector in balance in the next financial year to ensure the achievement of conditions that will work to the benefit of British industry.

Mr. Hal Miller: Does my right hon. and learned Friend understand the resentment in industry at the fact that the public sector borrowing requirement is being brought under control at the expense of private industry by increasing levies on it? What consideration was given to the capacity of industry to pay additional national insurance charges?

Sir Geoffrey Howe: Very close attention was given to that. It is for that reason that the measures that I have announced to restore balance to the nation's accounts next year are directed first, at the revenue from the North Sea


and, secondly, at raising additional revenue from the employees' side of the national insurance account. The changes for employers are the consequence of inflation and inflation alone. However, they represent a reduction in the real burden. The increase on that side is about 8·3 per cent. while the increase on the employees' side is about 27 per cent. I am sure that my hon. Friend will remember that these changes have enabled me to announce substantial reductions in the burden of the stock relief arrangements.

Mr. Shore: I understand that the Chancellor is raising the national insurance surcharge by £1,000 million. That is roughly the global sum. What is his prime objective in raising this additional and unwelcome sum? Does he think that it will help to diminish or to increase unemployment next year?

Sir Geoffrey Howe: The right hon. Gentleman would do well to remember that the national insurance surcharge was the invention of the Government of whom he was a member. He would do well to remember also that the additional income being raised by the changes that I made on 24 November is coming, as I have emphasised, not only from the surcharge but from national insurance contributions on which the surcharge is imposed. The burden beyond inflation there imposed will be on employees. The reason for making the changes is to ensure that the borrowing requirement is moving towards balance so that there is some prospect of interest rates coming down rather than going up. That is a matter of prime concern to industry.

Budget Incentives

Mr. Straw: asked the Chancellor of the Exchequer what evidence he has that the opportunities and incentives provided to business and to individuals in his 12 June 1979 Budget are working as intended.

Sir Geoffrey Howe: The large income tax cuts in my first Budget, together with later improvements in the taxation of enterprise, have greatly helped business and industry.

Mr. Straw: Is the right hon. and learned Gentleman aware that he is the only person in the House who believes that answer?

Hon. Members: No.

Mr. Cryer: Who believes it? Hands up those who believe it.

Mr. Marlow: indicated assent

Mr. Straw: Will the right hon. and learned Gentleman publish in the Official Report details of the evidence that suggests that these incentives are helping business? Is the absence of such real evidence the reason why the Chief Secretary came out with his extraordinary about-turn before the Conservative finance committee on Monday? For the third time, will the right hon. and learned Gentleman confirm or deny that the Chief Secretary said that the time had come to abandon monetary targets in favour of a flexible policy to help meet the grave economic recession? Did the right hon. Gentleman use those words?

Sir Geoffrey Howe: My right hon. Friend will no doubt answer the question himself if he has the opportunity to do so. [HON. MEMBERS: "Get up".] However, I am

happy to repeat his assertion that he did not use those words. The Government, including my right hon. Friend as much as myself, are committed to the maintenance of firm monetary policy by the measures that we have outlined.
I turn to the proposition underlying the hon. Gentleman's supplementary question. Far from it being the case that nobody in the House believes what I have said, I am happy to cite the support of the right hon. Member for Stepney and Poplar (Mr. Shore), who in a distinguished lecture that he gave about two years ago said:
financial incentives … play an important part".
He went on to pay tribute to the record of the Government of whom he was a member by saying:
in the last four years … the whole nation has been enmeshed … far more deeply in the tax net than anyone planned or indeed wished.
The Government are undoing the net that that Government created.

Mr. Beaumont-Dark: Is my right hon. and learned Friend aware of the considerable unease of manufacturing industry in the interpretation that the Revenue is placing upon his excellent idea of helping industry with the new stock relief scheme? I can quote a company that may lose £8 million as a result of the new scheme, which is supposed to help manufacturing companies. If companies suffer losses in this way, will my right hon. and learned Friend examine the scheme and consult the Revenue to ensure that the benefit accrues not only to storage and service industries but to the sector that needs most to benefit—namely, manufacturing industry—which, I believe, was his intention?

Sir Geoffrey Howe: I am happy to confirm to my hon. Friend the Government's concern for manufacturing industry and the need to restore success and profitability in that part of the economy. The stock relief changes that I announced were designed to provide that sort of help. A substantial part of the help that is intended to result from the changes is designed to go to manufacturing industry. My proposals were deliberately put out in consultative form. The Revenue will be prepared to listen to representations from my hon. Friend or anyone else. It is not possible to give an assurance that the changes are bound to have an automatic effect of the same sort in every company. There are different circumstances in different cases.

Mr. Stoddart: Does the right hon. and learned Gentleman recall that before the 1979 election he and his right hon. Friend the Prime Minister held out as their main incentive the prospect that they would leave more money in people's pockets for them to spend as they wished? Is it not a fact that over these past 18 months people have had less money left in their pockets to spend and that they are having to spend out more of it in higher prices, higher VAT and other increased taxes on products?

Sir Geoffrey Howe: No. The proportion of tax being raised by the direct tax system is lower now than when we came into office. The change was designed precisely to give people a greater choice as to how they spent their money.

Inflation

Mr. Marlow: asked the Chancellor of the Exchequer what has been the annualised rate of inflation based on the last four months.

Mr. Biffen: The increase in the retail price index over the four months to October was 7·2 per cent. on an annualised basis.

Mr. Marlow: Will my right hon. Friend accept that that is very encouraging news, as it is well below the rate of inflation? Bearing in mind that the right hon. Member for Leeds, East (Mr. Healey), on the basis of three months, talked about a rate of inflation some years ago of 9 per cent., will my right hon. Friend accept that the House is massively impressed by the success of a major plank of the Government's economic policy?

Mr. Biffen: My hon. Friend is right to be encouraged, but I hope that he will recollect that there were certain reservations about the statistical techniques of the right hon. Member for Leeds, East (Mr. Healey)—although I must say that we are learning to miss him already. Therefore, I hope that we would try to avoid taking three months' figures and annualising them as a means of talking about rates of inflation.

Mr. Cook: When the Chief Secretary looks at the figures over the past 12 months, will he acknowledge that the public sector component of the RPI has risen at a level of 25 per cent., nearly double the level for the private sector, as a direct consequence of his policy in public expenditure? Will he grasp the fact that it flies in the face of reason to argue that cuts in public expenditure cut inflation when they are achieved by putting rents up by 30 per cent., electricity by 33 per cent. and rail fares by 38 per cent.?

Mr. Biffen: The point that the hon. Gentleman makes is not unlike that made earlier by my hon. Friend the Member for Melton (Mr. Latham). The reason why there has been such a sharp rise in those component parts of the retail price index is that we inherited nationalised industries whose finances had been plundered in the pre-election period by the previous Government.

Mr. Dorrell: I welcome the recent fall in the rate of inflation, but can my right hon. Friend tell the House what steps he intends to take to ensure that the revival of demand that the Government expect next year is not preempted by inflation, as has happened so many times in the past?

Mr. Biffen: The prudent pursuit of fiscal and monetary policies.

Mr. Meacher: If the Chief Secretary is predicting a major economic U-turn by the Government, do they still believe that there is much connection between the money supply and the rate of inflation? If so, what is his estimate of the rate of inflation in about two years' time, with sterling M3 now escalating at 20 per cent. a year?

Mr. Biffen: In respect of the first and more tantalising part of the hon. Gentleman's question, despite the unquestioned reputation of the author of the article in The Guardian today I must tell the House that it does not accurately reflect the speech that I gave to a private meeting of the Conservative Party finance committee—and I have the modest advantage of having been there. As

far as the second part of the question is concerned, those who like myself, have been deeply committed to the policy of the Government have always been extremely chary of trying to make mechanical relationships between money supply and rates of inflation. We have stated our cautionary position from the very outset.

Mr. Shore: Is the Chief Secretary aware that the whole House will accept what he says — that the words reported in The Guardian were not the words that he used at that meeting of Back Benchers last night? However, in view of the great interest that there is—properly—bound to be in what he said, will he tell us what he did say about monetary supply targets?

Mr. Biffen: I believe that what I said was of sufficient moment not to be contained in a mere answer to a question. Since the right hon. Gentleman now sits in the distinguished position that he does, I look forward to many months of economic debate with him, when all the issues will be debated and measured in a proper forum.

Tax and Price Index

Mr. Ioan Evans: asked the Chancellor of the Exchequer what is the latest estimate of the taxes and prices index.

Mr. Peter Rees: The value of the tax and price index for October is 137·3, based on a January 1978 figure of 100.

Mr. Evans: With over 12,000 notified price increases this year alone, is not the gimmick of a tax and price index that the Government put forward backfiring? Will the hon. and learned Gentleman accept that while the annual rate of the RPI has increased by over 50 per cent. since the Conservative Government took office, the annual rate of TPI is at 16·8 per cent.? With national insurance contributions increasing and with possible tax increases in the Budget, would it not be preferable to have a prices and unemployment index rather than a tax and price index, which would truly reflect the economic situation in the country?

Mr. Rees: I am glad that the hon. Gentleman has become reconciled to the tax and price index. I hope that it has enlarged his perception of the problem. Quite how one could incorporate unemployment into an index I do not know, but we shall certainly consider the point.

Mr. Adley: Will my hon. and learned Friend merely ask the Opposition whether they are glad or sorry that inflation is falling rapidly?

Mr. Rees: I am sure that the Opposition will take note of my hon. Friend's question and answer it in their own way in their own time.

Mr. Foulkes: Who has ministerial responsibility for prices? Is the hon. and learned Gentleman aware that my questions have been passed from the Department of Trade to the Department of Employment and then to the Treasury and from one Minister in the Treasury to another, and even then he could not tell me the increase in the prices of turkey and Christmas pudding?

Mr. Rees: I condole with the hon. Gentleman. However, the allocation of functions is not a matter for me. It is a matter for my right hon. Friend the Prime Minister.

National Insurance

Mr. McQuarrie: asked the Chancellor of the Exchequer if he will take steps to give compensatory relief to employers to offset the effects of the increase to be paid in national insurance charges in consequence of his recent financial statement.

Mr. Biffen: While I appreciate the current difficulties of employers, I believe that the provisions of the Social Security (Contributions) Bill strike a fair balance in respect of their contributions.

Mr. McQuarrie: I thank my right hon. Friend for that reply, but does he agree that, as the employers' share of the national insurance contribution has grown steadily over the past few years, the additional surcharge imposed on them should be abolished, because they gain nothing whatsoever from it?

Mr. Biffen: I have noted my hon. Friend's recommendation. The House should know that the national insurance surcharge now yields £3,500 million a year. Doubtless any assessment made will be undertaken by my right hon. and learned Friend the Chancellor when he frames his Budget.

Mr. Whitehead: Will the Minister tell employers in my constituency and elsewhere in the country in what way the recent measures, which were not in fact announced but which are to take effect, aid the competitiveness of British industry?

Mr. Biffen: I am sure that the hon. Gentleman will realise that the measures are intended to finance social expenditure. If he denies the end, he can complain about the means.

Mr. Nicholas Winterton: I fully appreciate the very astute responses of my right hon. Friend. Does he agree that industry at present is suffering from a severe cash flow problem? Was it not very unfortunate of the Government, having reduced the minimum lending rate by 2 per cent., which was very welcome and provided relief for industry, to take back a great deal of that by increasing national insurance contributions from April next year and putting industry almost back to square one? When will we help the manufacturing base of the country to survive?

Mr. Biffen: I thank my hon. Friend for his kind words about the reduction in MLR, but I have to say to him that I believe that the financing of the welfare benefits that has been decided upon in the current legislation is wholly legitimate. It is in keeping with past practice. I can see no way of departing from it that would not otherwise require additional revenue. Givern that, the alternatives for business could be equally damaging.

Sterling M3

Mr. Knox: asked the Chancellor of the Exchequer what is the underlying rate of growth of sterling M3 since the beginning of the present target period.

Sir Geoffrey Howe: Sterling M3 grew by about 17 per cent. between February and November. After allowing for corset distortions, this is probably equivalent to an underlying annual rate of about 20 per cent.

Mr. Knox: Will my right hon. and learned Friend confirm that he does not expect a similar percentage

inflation rate at some time in 18 to 30 months from now? If so, does that not cast some doubt on the theory of monetarism?

Sir Geoffrey Howe: One has to have regard to monetary growth over a long period. The prospects are for a slower rate of monetary growth for the remainder of the financial year. Bank lending is showing signs of deceleration. The borrowing requirement, particularly in the new year, will be running at a lower rate, and the new index-linked savings certificates will yield substantial sums to fund the borrowing requirement. Those factors will make changes that will avoid the consequences suggested by my hon. Friend.

Mr. Richard Wainwright: Is the right hon. and learned Gentleman aware that the figures for the growth of money supply and public borrowing and the share of taxation are so contrary to his published financial strategy as to destroy its credibility? In order to assist business planning, will he replace the discredited strategy with a revised version?

Sir Geoffrey Howe: The figures underline the importance of pursuing the thrust of that strategy. It is crucial to achieve effective control of the size of the borrowing requirement if interest rates are also to be controlled. I shall welcome the hon. Gentleman's support in pursuing that strategy.

Mr. Jessel: Is my right hon. and learned Friend aware that most of my constituents comprise one of the most intelligent communities in the country? Most of them think of M3 as the name of a motorway. Is he further aware that they are very pleased by the falling rate of price increases and the fact that there are fewer strikes?

Sir Geoffrey Howe: I am delighted to join my hon. Friend in paying tribute to the supreme wisdom of his constituents and endorsing their wisdom in that respect. Price inflation is coming down and is likely to continue to fall. We are facing the lowest level of industrial disputes for 30 years, and realism and common sense are spreading widely throughout British industry.

Mr. Shore: The Chancellor's reply of 20 per cent. is, the House recognises, a matter of obvious embarrassment to him. May I ask him, however, to be neither heartened nor depressed by the movements of the money supply? May I ask him once again to turn his attention away from what is now generally accepted as an exploded obsession to the real economy, to the level of unemployment and to the actual measures of output of the economy?

Sir Geoffrey Howe: The real economy is no less important than monetary statistics, and in the real economy we see inflation falling, interest rates recently reduced and wage bargaining at a much more sensible level. It is now crucial to achieve the same moderation in pay settlements in the public sector in order to diminish that burden on the trading economy.

North Sea Oil (Taxation)

Mr. Douglas: asked the Chancellor of the Exchequer if he will make a statement on his proposed changes in taxation on North Sea oil, giving his estimates of the "Government take" from each of the fields affected and the anticipated revenues in the next five years.

Mr. Peter Rees: Forecasts of Government take from the North Sea depend on a number of factors — including changes in the price of oil, costs and the production programme — which cannot be precisely estimated. Looking one year ahead, I expect total Government revenues in 1981–82 from oil and gas production to be in the range of £4½ billion to £5 billion at 1980–81 prices with about £900 million attributable to the proposals outlined in the statement of my right hon. and learned Friend the Chancellor on 24 November. For reasons of confidentiality, I cannot provide estimates for individual fields.

Mr. Douglas: Will the hon. and learned Gentleman confirm that the estimates that he has just given show no change from the forecast he made some months ago? Does he agree that his Government are being extremely profligate with this finite resource by using all these revenues to sustain social expenditure, unemployment benefits and so on instead of putting them aside to sustain our manufacturing base?

Mr. Rees: My right hon. and learned Friend made it clear in the documents published alongside his statement of 24 November that there had been a diminution in our expectation of the take next year apart from the new tax. On the question of profligacy, North Sea oil revenues are not hypothecated to any particular form of activity. We could just as easily pray in aid the additional sums being put into various employment measures and the capital requirements of the nationalised industries.

Mr. Eggar: What is the net increase in the Government take as a result of the 24 November announcement about a windfall profits tax?

Mr. Rees: We hope about £900 million.

Mr. Grimond: In view of the large take from the North Sea, and since British industry now has to buy the most expensive fuel in Europe, will the Government consider taking the tax off oil?

Mr. Rees: I cannot anticipate my right hon. and learned Friend's Budget.

Mr. John Home Robertson: Does the Minister of State accept that the whole of the Government's take from North Sea oil revenues in the current year and next year is already being swallowed up by unemployment benefits?

Mr. Rees: I do not. The figures do not match up in the way suggested by the hon. Gentleman.

Economic Policy

Mr. Canavan: asked the Chancellor of the Exchequer what steps he is taking to monitor the effects of the economic measures he announced to the House on Monday 24 November.

Sir Geoffrey Howe: I shall continue to watch the relevant economic indicators closely and to review other evidence about developments in the economy.

Mr. Canavan: Does the right hon. and learned Gentleman admit that the increased national insurance contributions will cut the living standards of those in work end, with the cuts in public expenditure, will increase the number of people out of work? In view of forecasts that unemployment may reach 3 million some time next year

and that the financial cost of unemployment will be bigger than the total public sector borrowing requirement, how much worse are things to get before the Chancellor changes course and invests more money to provide more real jobs?

Sir Geoffrey Howe: The increase in national insurance contributions is a fair and sensible way to secure revenue to maintain social benefits and social services upon which the nation insists.

Prime Minister (Engagements)

Mr. Bob Dunn: asked the Prime Minister if she will list her offical engagements for Thursday 11 December.

The Prime Minister (Mrs. Margaret Thatcher): This morning I presided at a meeting of the Cabinet. In addition to my duties in this House, I have also held further meetings with ministerial colleagues and others. This evening I have been invited to speak at the Welsh CBI dinner in Cardiff.

Mr. Dunn: Is my right hon. Friend aware that business men in my constituency, while welcoming the reduction in MLR and the announcement of a 6 per cent. cash limit for public sector pay, still regard public expenditure as an enormous millstone round their necks and express complete support for the Government's intention to reduce it further?

The Prime Minister: I wholly agree with my hon. Friend that we cannot continue putting increasing burdens on the wealth-producing sector of the economy. That would result in fewer wealth-producing firms. We must, therefore, have regard for public expenditure, and I hope that the local authorities will think twice before they make severe increases in local rates.

Mr. John Morris: Would it not be both better and more honest for the people of Wales if the Prime Minister clarified the position of the steel industry before going to South Wales today? I always welcome meaningful and proper consultation with the trade unions, but will the Prime Minister tell us the basis upon which Mr. MacGregor is having his consultations today before he talks to the steel board? What is the purpose of the steel board today?

The Prime Minister: Mr. MacGregor is charged with the duty of producing a plan for the future of the British Steel Corporation. He is carrying out the duties of consultation, and he would be under very severe criticism if he did not consult before that plan went to the board for approval. I have not seen the plan. I do not know its content. I shall not see it until it is presented to the Government, and that will not be until after the board has approved it.

Mr. Farr: Will my right hon. Friend have any chance today to consider whether it is possible for her to make an official statement on her discussions in Dublin with the Irish Prime Minister? The feeling is that whilst no one in the House dreams for a moment that she would agree to anything that would weaken the longstanding and historic link between Great Britain and Northern Ireland, the interpretation of the talks that is coming from Dublin alone means that a somewhat misleading point of view is now being received.

The Prime Minister: There never have been statements on bilateral talks such as these between the United Kingdom and Ireland. I think it most unwise to set a precedent. That would elevate the meeting far beyond its importance or significance. The agreement was set out in a communiqué. There is nothing behind the communiqué—it is all there.

Mr. Foot: May I plead once again with the Prime Minister to give her report to the House of Commons on her discussions in Dublin so that hon. Members on all sides will be able to question her? Will she take into account before she replies the full debate that is taking place in the Dail? We ask her to return to the subject next week.
May I refer to her answer on the steel industry— [HON. MEMBERS: "No."] I know that Conservative Members are not very interested in the steel industry and never have been. In view of the right hon. Lady's remarks a few minutes ago, will she give us an absolute guarantee that there will be a debate in the House before Christmas and before any decision is taken on the plan for steel that Mr. MacGregor may be making public tomorrow? Does she accept that great numbers of jobs are involved and that it is partly direct Government policy that has led to the collapse in the steel industry and the reduction in demand for steel in our economy? Will she give an absolute assurance to the House this afternoon?

The Prime Minister: On the right hon. Gentleman's point about the talks between the United Kingdom and the Republic of Ireland, the agreed statements are in the communiqué. If the right hon. Gentleman has any particular question to put to me, I hope that he will do so. I am here for a quarter of an hour every Tuesday and Thursday. Although everyone is asking for a statement, precious few hon. Members have put pertinent questions about the agreed communiqué which has already been issued and published.
Secondly, on the question of steel, the right hon. Gentleman will have to pursue that matter with my right hon. Friend the Chancellor of the Duchy of Lancaster. I doubt whether there would be time for a debate next week. With all due respect, it would be far better to take time thoroughly to consider the report before any of us reach conclusions upon it.

Mr. Foot: The two matters are important for the people of this country. Does the right hon. Lady realise that it is not satisfactory for her to say that we should leave the steel issue until after Christmas? We demand a debate on that subject in the House next week. Will the Government provide the time? On the Dublin meeting, as the right hon. Lady has put it in those terms, does she agree with the statement made in the Irish Parliament this morning that it was the most important visit to the Republic since the foundation of the State? Does she agree with that statement made by the Taoiseach in the Dail, and, if so, why?

The Prime Minister: It is the first time that four members of the Cabinet, in pursuit of the bilateral talks that we now have between fellow members of the EEC, have attended such talks in Dublin. It is the first time that they have been held in Dublin. Last time they were held at No. 10 Downing Street between similar Ministers. That does not seem to me to be unusual.
On the question of steel, I agree that it is extremely important to the future of this country, and to many parts

of this country—not only to those who work in steel but to those who work in industries that depend upon it. For that reason, I think that the report requires thorough consideration before we rush in to make comments upon it.

Mr. Foot: On the question—[Interruption.]

Mr. Speaker: Order. The sooner we have order, the more likely I shall be to call other hon. Members.

Mr. Foot: On the question of steel, if the right hon. Lady will not provide a debate, we shall have to force one. That is our answer to her on that issue. On the Dublin meeting, which is a matter of great importance, does the right hon. Lady agree that if four Ministers think that it is important to go to Dublin to take part in the talks, at least one of them should have the courage to come and report to the House?

The Prime Minister: On the right hon. Gentleman's latter point, four Ministers is the usual number that we take to bilateral talks. It is far more natural than the right hon. Gentleman is willing to concede for this Government to have regular talks with the Government of the Republic of Ireland in the same way as we have regular talks with France, Germany and Italy. We have been trying to establish that regularity and trying to achieve better co-operation and understanding. We have received excellent security co-operation along the border.
On the question of steel, of course the right hon. Gentleman is free to use his Supply days precisely as he wishes. I can say only that the Government will wish to study the report very carefully indeed. Doubtless my right hon. Friend the Secretary of State will wish to have talks with Mr. MacGregor. We shall wish to discuss the matter in the Cabinet before we rush into a statement about it. It would be reasonable to give a certain amount of time to that study for consultations to take place and to find all the facts before we make important pronouncements upon it.

Mr. McQuarrie: Has my right hon. Friend's attention been drawn to the action of the Norwegian authorities yesterday in banning 18 trawlers fishing legally in proper waters? If it has, will she hold urgent talks with her right hon. Friend the Minister of Agriculture, Fisheries and Food to get something done about that matter before we have another Icelandic position, which would do nothing towards the completion of the common fisheries policy?

The Prime Minister: I understand the importance that my hon. Friend attaches to the issue. I shall draw my right hon. Friend's attention to the matter so that he can give urgent attention to it.

Mr. Barry Jones: asked the Prime Minister what are her official engagements for 11 December.

The Prime Minister: I refer the hon. Gentleman to the reply which I gave a short time ago.

Mr. Jones: Will the Prime Minister please reconsider her refusal to tell us anything about the widespread speculation about steel closures? Does she truly understand the awesome scale and the distressing consequences of a major steel closure? Does she really wish to go down in history as the Premier who turned No. 10 into the slaughterhouse of the steel industry and the abattoir of British manufacturing industry?

The Prime Minister: It would be futile and irresponsible to make statements on a report that I have not seen. I do not intend to do so.

Mr. Hill: Is my right hon. Friend aware that we are approaching a critical stage in the formation of the British Leyland five-year corporate plan, which is of great importance to the whole country? Can she assure me that she will use hex powers to enable the Leader of the House to allocate a day's debate when the corporate plan is released?

The Prime Minister: The corporate plan has been presented to the Government. It will shortly be considered. When decisions have been reached, they will be announced to the House. I imagine that my hon. Friend will make representations to the Leader of the House to have a debate on these important matters.

Mr. David Steel: Does the Prime Minister understand that those of us who wish to applaud the initiative that she took in going to Dublin and in having wide open talks with the Irish Government on new relationships between our two countries — having noted the Irish Premier's statement that it was the most important meeting since the creation of the Republic—are absolutely baffled by her refusal to make a statement to the House and also at her insult to the House in pretending that it was a routine Common Market discussion?

The Prime Minister: Equally, does the right hon. Gentleman understand that I am baffled by the fact that, after about 10 questions about whether I will make a statement, few hon. Members have asked substantive questions about the communiqué?

Mr. William Shelton: Has my right hon. Friend seen the report that two British cars were among the three cars of the year? Is that not an encouragement to British industry?

The Prime Minister: I was pleased to hear that two British cars were included. I hope that it will raise the

proportion of the car market that goes to British cars. In so doing, it will also raise the proportion of steel bought from British Steel and the components and other items bought from Britain.

Mr. Donald Stewart: Is the Prime Minister aware of the widely divergent versions of the Dublin meeting both in Dublin and in London? Is she further aware that unless the matter is clarified by a statement or a debate the Dublin version will pass into history in Eire?

The Prime Minister: I am responsible in part for the agreed communiqué. Upon that communiqué I stand. Upon that communiqué the right hon. Gentleman may ask me any questions that he wishes.

Mr. Trippier: Will my right hon. Friend find time today to warn the country of the attempts by the British Communist Party to increase its influence in the Labour Party? [Interruption.] Was she not appalled to read the article in this morning's Daily Mail pointing out that a Communist played a leading role in the party political broadcast on behalf of the Labour Party on Tuesday right?

The Prime Minister: To many of us it seems that there is precious little difference between the policies of the Communist Party and the policies of the Labour Party.

Mr. Garel-Jones: On a point of order, Mr. Speaker. Will you give some guidance to me and to hon. Members in all parts of the House? We appreciate that the Leader of the Opposition is anxious to make his points at Question Time, but I think that the whole House is surprised and upset at the way in which he seems to be occupying well over half of Question Time—and, indeed, keeping out many of his own Back Benchers.

Mr. Speaker: I have said on previous occasions that I always allow extra latitude to the Leader of the Opposition. It is a matter for his judgment and for mine —[Interruption.] Order. I am not handing that over.

Business of the House

Mr. Michael Foot: Will the Leader of the House state the business for next week?

The Chancellor of the Duchy of Lancaster, Leader of the House of Commons and Minister for the Arts (Mr. Norman St. John-Stevas): The business for next week will be as follows:
MONDAY 15 DECEMBER—Private Members' motions until 7 o'clock.
Afterwards, Proceedings on the Anguilla Bill [Lords].
Motion on the Imprisonment (Temporary Provisions) Act 1980 (Continuance) Order. 
TUESDAY 16 DECEMBER—Supply [2nd Allotted Day]: Subject for debate to be announced. 
The House will be asked to agree the Civil and Defence Votes on Account and the Winter Supplementary Estimates.
Motion on Community tariff quotas for newsprint on the Department of Trade's unnumbered explanatory memorandum of 28 November and supplementary memorandum of 11 December.
Motion on the Redundant Mineworkers and Concessionary Coal (Payments Schemes) (Amendment No. 3) Order.
WEDNESDAY 17 DECEMBER — Proceedings on the Consolidated Fund Bill.
THURSDAY 18 DECEMBER—Supply [3rd Allotted Day]: Debate on developments in the European Community January-June 1980, Cmnd. 8042.
FRIDAY 19 DECEMBER—It will be proposed that the House should rise for the Christmas Adjournment until Monday 12 January 1981.

[Debate on European Community proposal relating to newsprint quotas: The relevant reports of the European Legislation Committee are the Second and Fourth Reports of 1980–81 (HC 32-ii and 32-iv, 1980–91). Neither report has been published, but photocopies are available in the Vote Office.]

Mr. Foot: May I remind the right hon. Gentleman that there is a series of extremely important interlocking economic and industrial questions on which we have asked him to ensure that we have statements before the house rises for the Christmas Recess? Will he now tell us about them?
Will the right hon. Gentleman make sure that the Secretary of State for the Environment makes a statement to the House on the rate support grant, which will affect local authorities in a very special way this year and may affect the employment levels throughout the country in a very special way this year? May we therefore have a statement from the Secretary of State for the Environment on Tuesday?
Will the right hon. Gentleman also tell me when we shall get the statement—for which I have asked for two weeks now, or at any rate for one week — on the financial crisis in the railways, which is a matter of major importance for the country's economy as a whole?
With regard to the steel industry, which we were discussing a few minutes ago, we do not believe that the Government's response to what I have said and to what has been said generally in any way meets the position. We believe that it is essential for the House to have a debate on the matter first. [Interruption.] In that case, we shall

on Tuesday table for discussion the question of the Government's direct responsibility for the difficulties of the steel industry, which carries it very much further. When the Home Secretary intervenes from his reclining position to tell me how to—[Interruption.] It sounded to me as though he was saying "Supply day, Supply day". He has been saying it for quite a long time. May I tell him that we believe that we had every right to urge—the Government have so far refused to agree—that there should be a general debate next Tuesday on unemployment.
We are confronted, therefore, with a mounting industrial and economic crisis of huge dimensions throughout the country, and we shall have to take that into account in all the business next week, including the motion for the Adjournment for the Christmas Recess, if that is, tabled. We may have to table an amendment to that motion to get the Government to report to the House properly on all these questions.

Mr. St. John-Stevas: The right hon. Gentleman has in part answered his own question. Of course, these important matters should be debated by the House, but we have made available a Supply day on Tuesday and it is open to the Opposition to choose what subjects they wish. On Thursday next week there is a second Supply day, which is at present devoted to European matters.
With regard to the statements for which the right hon. Gentleman has asked, I cannot promise an early statement on transport, one of the reasons being that the demand for statements next week is becoming so heavy that we are in danger of their cutting into the Opposition Supply day or into private Members' time. I have consulted my right hon. Friend the Secretary of State for the Environment and he is more than willing to make an oral statement on the rate support grant in the House next week. If necessary, I shall ask him to make an additional statement on other matters.

Mr. Foot: The right hon. Gentleman must take into account that it is not the Opposition that is responsible for the series of economic crises; it is the Government. The Government have a duty to report to the House upon them. The Government have a duty to ensure that the House does not go away for Christmas without these matters being properly debated and discussed. We are seeking to do our best to assist the Government in relation to the steel debate, although it will mean that we shall not be able, as a result, to have the more general debate on unemployment which I am sure is desired by many hon. Members, certainly on the Opposition Benches.
The right hon. Gentleman has now answered the question about the financial crisis on the railways. I hope that there will be a statement about that, too. I hope that at the beginning of next week he will let us have a look at the series of statements that he is proposing, because they will govern our attitude to the motion that he may seek to move on Wednesday.

Mr. St. John-Stevas: I shall do my best to ensure that statements on a variety of subjects are made next week, but there is a physical limit to the number of statements that can be made in any one week in this House. There is the opportunity to raise a number of subjects on the Consolidated Fund Bill. I am proposing to table on


Wednesday the motion for the Christmas Adjournment, when there will be further opportunity for hon. Members to raise subjects of importance and interest to the House.

Mr. Edward du Cann: If the MacGregor report merits the serious study that the Prime Minister wisely recommends, will my right hon. Friend ensure that we in the House see it as early as possible? So often we have to read parts of these reports, which are leaked somewhat selectively.
Secondly, in the context of today's report by the Select Committee on the Treasury and Civil Service, will my right hon. Friend arrange, in the new year, for an early debate upon the subject of the Civil Service?

Mr. St. John-Stevas: I shall bear in mind the second request. I shall have to consider it in the context of the programme when we return after the recess. It is essential that the responsible Minister should have time to study Mr. MacGregor's report, and that the House should have an opportunity to assess it seriously. I shall do what I can to see that the report is made available to hon. Members.

Sir Harold Wilson: When the main spate of Second Readings—usually held at this time of the year—has; been completed, will the right hon. Gentleman provide time to debate the final report of the committee of inquiry into the financial institutions, which was published more than six months ago? In that way we should be following the example of the Macmillan report, the Radcliffe report and, I think, every report of that type since 1720.

Mr. St. John-Stevas: I welcome the right hon. Gentleman back to the House after his recent illness. We are delighted to see him. I congratulate him on his excellent report on the financial institutions of the City, which disappointed so many of his friends. A debate was held on the Radcliffe report. The right hon. Gentleman's report ranks with that, and I shall do my best to see whether we can arrange a debate at an appropriate moment.

Sir Bernard Braine: Given the spontaneous and overwhelming opposition expressed on both sides of the House to the recent strange and unacceptable proposals for the future of the Falkland Islands, and given that anxieties have been expressed to some of us by the Falkland Islanders, will my right hon. Friend give an assurance that this subject will be debated at an early stage?

Mr. St. John-Stevas: I cannot give that assurance, but I can assure the right hon. Gentleman that the Government are determined to protect the rights of the Falkland Islanders.

Mr. Arthur Lewis: As the Leader of the House said that we would have various oral statements next week, will he ask the Home Secretary to make a statement on the extent to which the Government have taken positive steps to prevent lawlessness, and the growing number of muggings, and so on? Does the right hon. Gentleman not accept that the Government were elected to prevent lawlessness and to increase law and order? They have given the police extra pay, but there has not been any improvement in the suppression of lawlessness.

Mr. St. John-Stevas: My right hon. Friend is pursuing a vigorous policy against lawlessness, principally by

strengthening and supporting the police. That is important. I cannot promise a debate, but the subject might well be relevant to the debate on the Consolidated Fund Bill.

Mr. Nigel Forman: What progress has been made on the use of the Public Bill procedure? That is a matter of great interest to the House. May we have an early debate in the new year on the important subject of data protection, on which the Lindop committee reported as long ago as 1978? In due course the House will have to legislate on that.

Mr. St. John-Stevas: I shall consider my hon. Friend's request for a debate on data protection. Following the endorsement by the House of the Government's proposal to undertake an experiment, in which Standing Committees on Public Bills will be permitted to have up to three sittings in Select Committee form, Standing Committees will be able to take evidence in public. The first two Bills selected for the new procedure are the education special needs Bill—which will be introduced in this House shortly after Christmas—and the Deep Sea Mining (Temporary Provisions) Bill, if and when that Bill comes from the other place. I shall make a further announcement about the third Bill as soon as possible.

Mr. Stephen Ross: Given that we are not going to get a statement on the recent visit to Dublin, can we not at least have a debate on it? The situation in Northern Ireland is serious, and to be allowed one and a half hours after midnight to discuss the Northern Ireland (Emergency Provisions) Act is insufficient.

Mr. St. John-Stevas: Hon. Members did not have only one and a half hours after midnight in which to debate Northern Ireland. They had a full day's debate on the Northern Ireland (Appropriation) Order. That is equivalent to the Consolidated Fund Bill. Indeed, the House rightly sat until late last night debating Northern Ireland affairs. I cannot promise another full debate or. Northern Ireland in the immediate future.

Mr. John Silkin: Will the Leader of the House reconsider including the British Nationality Bill in the new Select Committee procedure? It fits into that procedure. If such Bills are not included, I suspect that the new Select Committee will be like a neutered tabby cat.

Mr. St. John-Stevas: I shall not follow the right hon. Gentleman into animal metaphors. I am certainly willing to consider his suggestion. It is important that major Bills should be included in this procedure, and I shall be happy to discuss this subject further with the right hon. Gentleman.

Mr. John Farr: Given the remarks made by my right hon. Friend the Member for Taunton (Mr. Du Cann) about the Civil Service, can my right hon. Friend tell us when the Government expect to receive the report on index-linking for civil servants' pensions? Will he give the House an assurance that we shall have an opportunity to debate it at the earliest possible opportunity?

Mr. St. John-Stevas: We have not got a date for the reception of the Scott report. However, I imagine that the report on index-linked pensions will be before us early in the new year. The Government will then consider the matter, and will draw conclusions. As my hon. Friend raised the subject of the Civil Service, I take this


opportunity to pay tribute, on behalf of all hon. Members, to the work of the Civil Service and to the impartial service that it gives to the House and to all parties.

Mr. David Winnick: Does the right hon. Gentleman recognise that as Leader of the House he has an obligation to all hon. Members? Given that there is a demand for a statement on the Dublin talks, and given the importance of those talks, will he provide sufficient time for a statement? Will he bear in mind that a debate on those talks is taking place in the Dublin Parliament? If those talks can be debated in the Dublin Parliament, why cannot there be a debate in the British House of Commons?

Mr. St. John-Stevas: As the hon. Gentleman knows, the subject was raised yesterday during the debates on Northern Ireland. As Leader of the House, I am conscious of my duty to all hon. Members. However, the precedents are against the hon. Gentleman. When the right hon. Member for Huyton (Sir Harold Wilson) and the right hon. Member for Cardiff, South-East (Mr. Callaghan) held the office of Prime Minister, six meetings were held with the Taoiseach. Not once was a statement made in the House after a meeting. The precedents are there for hon. Members to see. The fact that the Prime Minister of Ireland described the meeting as "historic" is not a reason for the Prime Minister of the United Kingdom to make a statement in the House.

Mr. Foot: The right hon. Gentleman appears to be claiming that there are precedents for the Prime Minister's action. On how many of those previous occasions did the Taoiseach hold a debate in the Irish Parliament and describe the matter in such terms?

Mr. St. John-Stevas: No Minister, whether the Prime Minister or the humblest Under-Secretary, has any responsibility for what the Prime Minister of Ireland says in his own Parliament.

Mr. Dudley Smith: My right hon. Friend will be aware that a debate has been promised on the possible introduction into Britain of heavier lorries. When is that debate likely to take place? Together with the Patronage Secretary, will my right hon. Friend bear in mind the fact that influential sources have suggested that there should be a free vote at the end of the day?

Mr. St. John-Stevas: I shall certainly consider those matters. I always welcome a free vote which applies to everyone, including the Front Bench. However, free votes have become progressively rare. I cannot promise a debate on this important subject next week.

Several Hon. Members: Several Hon. Members rose—

Mr. Speaker: Order. I propose to call only those right hon. and hon. Members who have been rising.

Mr. A. E. P. Duffy: May I draw the attention of the Leader of the House to early-day motion 19 on unemployment in South Yorkshire?
[That this House deplores the rapidly increasing level of unemployment in South Yorkshire, where nearly 60,0.00 people were out of work in November, which amounts to 10 per cent. of the county's workforce and represents an increase of 3,300 jobless in just one month;

notes that unemployment in Mexborough is 16·2 per cent., the eighth highest in England, in Rotherham, a development area, it is 10·8 per cent., in Barnsley 10·6 per cent., in Doncaster 11·7per cent., and in Maltby 12·6 percent., all intermediate areas, whilst in Sheffield, which is due to lose its assisted area status in 1982, and where there is virtually no demand at all in the manufacturing sector and unfilled vacancies are the lowest on record, there are now 24,500 people out of work, an increase of 50 per cent. since May; further notes that gloomy though these figures are, they further conceal the even more serious unemployment problems of smaller areas and of particular groups of people in such towns as Penistone, Wombwell, Thorne, Goldthorpe and Dinnington; calls attention to the Monopolies Commission Report on the British Gas Corporation and its threat to jobs in South Yorkshire, where it has been estimated that at least 500 jobs are at risk; and calls upon the Government to recognise that the magnitude of the unemployment problems justifies a far higher level of aid to South Yorkshire, and urges it to match the vigorous employment promotion and development programmes of the county council and the district councils.]
How far can Ian MacGregor's proposals on South Yorkshire go? The right hon. Gentleman must know, even if the Prime Minister does not, that major surgery is contemplated. How far can those proposals be carried out without totally destroying the morale and commitment of men and management in private as well as public steel in its British heartland — Sheffield? Therefore, will the right hon. Gentleman look more seriously at the request by my right hon. Friend the Leader of the Opposition for a special debate next week, before the Christmas Recess?

Mr. St. John-Stevas: Everyone in the House is concerned about unemployment. The situation in South Yorkshire, though difficult, is by no means the most difficult facing the country. I shall certainly bear in mind what the right hon. Member for Ebbw Vale (Mr. Foot) said. However, I cannot fit in a debate in Government time next week.

Mr. Selwyn Gummer: Does my right hon. Friend agree that many hon. Members on the Government Benches regard defence as perhaps the most important subject that we discuss? In order that the Opposition should be properly represented on this occasion, will he arrange a debate on one of the two motions which are down for an early day which draw the attention of the House to the fact that the Leader of the Opposition, in distributing his Shadow Cabinet portfolios, thought defence so unimportant as not to be worthy of a seat in the Shadow Cabinet?

Mr. Michael Cocks: Be careful.

Mr. St. John-Stevas: I am grateful for the warning from the Opposition Chief Whip that I must not dissipate the ecumenical atmosphere which prevails at the moment.
I have noted the valid point made by my hon. Friend, but it is a matter for the Leader of the Opposition to decide. I am more concerned with the affairs of the real Cabinet than of the Shadow Cabinet.

Mr. Douglas Jay: As I understand that the Council of Ministers is to discuss the common fisheries policy again next week, may we be assured that


there will be a statement by the Minister of Agriculture, Fisheries and Food on this important issue before the Christmas Recess?

Mr. St. John-Stevas: I shall certainly bear in mind the right hon. Gentleman's request.

Mr. Nicholas Winterton: Does my right hon. Friend accept that many hon. Members on the Government Benches share the deep feelings expressed by my hon. Friend the Member for Essex, South-East (Sir B. Braine) about the Government's intentions towards the Falkland Islands and believe that a debate on this vital issue is long overdue and should be held as soon as possible after the Christmas Recess?
Am I correct in believing that there will be a statement on the rate support grant next week and that it is the custom of the House to debate such announcements by the 3overnment before Christmas? Otherwise, Members of Parliament seeking to represent their constituencies are placed in a very difficult position, as are local authorities. Will he find time to debate this subject on Thursday, instead of the European debate?

Mr. St. John-Stevas: I hope that I reassured my hon. Friend on the status of the Falkland Islanders in the reply that I gave to my hon. Friend the Member for Essex, South-East (Sir B. Braine). I think that that statement shows that the need for an immediate debate is somewhat Jess pressing, but I shall consider that matter in future.
I have already said that the statement on the rate support grant will be made on Tuesday by my right hon. Friend the Secretary of State for the Environment. My hon. Friend is correct in saying that a debate is normally held shortly afterwards. But if he casts his mind back to the unfortunate events at the end of the last Session when this statement had to be deferred, he will see that it is not possible to fit in a debate because of the delay caused by that incident. However, shortly after we return from the recess, we shall have a debate on the rate support grant.

Mr. Donald Dewar: Has the leader of the House had an opportunity to study the grotesque happening on Tuesday in the Scottish Grand Committee when the Secretary of State for Scotland could not muster a single vote and, incredibly, not even his own vote in support of his policy to close colleges of education in Scotland? Has he also noted that the Under-Secretary of State for Scotland, the hon. Member for Edinburgh, North (Mr. Fletcher), is quoted in the press today as conceding that the whole business was a shambles? In view of that, despite the pressures, will he arrange for the Secretary of State for Scotland to explain what he proposes to do about it?

Mr. St. John-Stevas: I do not follow events in the Scottish Grand Committee as closely as does the hon. Gentleman. Nevertheless, I am aware of the issues involved. Indeed, I have had considerable correspondence from Scotland on this matter, and I have been in consultation with my right hon. Friend the Secretary of State for Scotland on the future of education colleges. My right hon. Friend is very much aware of the problems facing the Scottish education system as a result of the present proposals. I shall draw the hon. Gentleman's re narks to the attention of my right hon. Friend

Mr. John Bruce-Gardyne: My right hon. Friend's notice of the business for Tuesday reminds the

House that we are again to be called upon to approve hundreds of millions of pounds of Supplementary Estimates on the nod. In the light of that, may I ask what progress has been made on the establishment of the new Procedure Committee?

Mr. St. John-Stevas: We are committed to setting up this Procedure Committee. Discussions are going on between myself and the new Shadow Leader of the House. Discussions are also going on through the usual channels. I hope to be in a position to table a motion next week.

Mr. Bruce Millan: The Leader of the House has acknowledged that there is serious concern in Scotland about the Secretary of State's proposals on colleges of education. Would not the simple answer be for the Secretary of State for Scotland to make a statement next week withdrawing his proposals? Will the right hon. Gentleman ask him to do that?

Mr. St. John-Stevas: I am sure that that would give satisfaction to some—[HON. MEMBERS: "All."]—but it would cause difficulties for others. In view of the importance of the matter, I shall see the Secretary of State for Scotland and discuss the matter with him.

Mr. Tony Marlow: Would not my right hon. Friend be able to overcome the problem that has become more than apparent recently, particularly today, by setting aside a quarter of an hour at a quarter to two every Friday so that the geriatric vandal and elderly windbag the right hon. Member for Ebbw Vale (Mr. Foot) can question the Prime Minister to his heart's content, thereby allowing other right hon. and hon. Members the opportunity to question my right hon. Friend on Tuesdays and Thursdays?

Hon. Members: Withdraw.

Mr. St. John-Stevas: Never mind about withdrawal at this stage. I do not know whether it is better to be an elderly or a juvenile windbag. [Interruption.]

Mr. Speaker: Order. Time is running out. The Leader of the House speaks for us all.

Mr. Edward Rowlands: The Leader of the House will know that for many weeks we have pleaded with him to arrange a debate on the report of the Select Committee on Welsh Affairs. As the Prime Minister is going to Cardiff this evening and will sense the wrath of the Welsh people at the present economic situation, will the right hon. Gentleman make an opportunity available for hon. Members to express similar anger and sense of frustration in the House by organising a debate on the Select Committee's report?

Mr. St. John-Stevas: There has just been a debate on Welsh affairs in the Welsh Grand Committee—

Mr. Rowlands: On housing.

Mr. St. John-Stevas: Yes, I know that it was on housing. It was not on the Select Committee's report. We must have a debate on the Committee's report when we return after Christmas. I cannot guarantee that it will be on the Floor of the House, but I can guarantee that there will be a debate. I suggest that the matter of where the debate should be held should be discussed through the usual channels.

Mr. Robert Kilroy-Silk: Is the Leader of the House aware that the White Paper on young offenders


contains a number of proposals which will have serious consequences for juveniles and the criminal justice system? Will he give an assurance that we shall have the opportunity for an early debate on the White Paper?

Mr. St. John-Stevas: It is an important White Paper, and I know of the hon. Gentleman's interest in the subject. I shall bear that in mind when planning our programme after the recess.

Mr. Kenneth Marks: I draw the attention of the Leader of the House to early-day motion 53, which refers to the anomaly that the House has effectively abolished capital punishment in this country but that it still exists in the few colonies for which we are responsible.
[That this House reiterates its view that capital punishment for murder should not be reintroduced in the United Kingdom and urges the Government to advise Her Majesty to exercise the Prerogative of Mercy in all cases in British Colonies.]
Will the right hon. Gentleman urge the Minister in charge of the debate on Anguilla on Monday to make clear the Government's view on this matter?

Mr. St. John-Stevas: I will certainly pass that on to the Minister concerned. But, of course, there is no necessary connection between abolition of capital punishment in the United Kingdom and abolition in the dependent territories. There is, of course, an exercise of the Crown's prerogative of mercy in those territories, which is delegated to the Governors, who act on their own judgment after consulting their own executive councils. As hon. Members will be aware from the answer given by my hon. Friend the Minister of State to a question on 29 October, this does not preclude Her Majesty from exercising clemency on the advice of the Government here, but I should say to the hon. Gentleman that in practice such interventions are very rare.

Mr. Christopher Price: May I urge upon the right hon. Gentleman the great need for a statement on transport next week? Is he aware of the very real anger of my constituents—a large number of them hitherto solid supporters of his party rather than of mine—about the closure of four stations in my constituency and many more over the rest of South London, and the virtual prevention of those people from getting home at night by public transport? May we have a chance to question the Minister of Transport about the situation?

Mr. St. John-Stevas: I am aware of the situation in South London and of the latest developments today, and I express my concern about the situation. The difficulty lies in fitting in yet another statement next week, but I will certainly consider the matter to see what we can do. Meanwhile, I will raise the matter urgently with my right hon. Friend the Minister of Transport.

Mr. George Foulkes: Will the Leader of the House confirm that a guarantee has been given to the Prime Minister of Canada of unlimited time for the passage of the Canada Bill through this House, and that this is holding up other legislation, such as that for the registration of old people's homes and other residential homes?

Mr. St. John-Stevas: No, I cannot. No such guarantee has been given. No Government could promise any other Government unlimited time for a measure in this House. What my right hon. Friend the Prime Minister has made clear is that if a request for amendment of the Canadian constitution is received we shall act in accordance with precedent and respond to it. But it must be clear that the progress and implementation of any such request must depend upon the general state of business in the House. That is why I have made it clear that the earlier that request is received the more likely it is that it can be dealt with in this Session.

Mr. Peter Hardy: Would the Leader of the House agree that his answer to the right hon. Member for Taunton (Mr. du Cann) and the Prime Minister's answers earlier this afternoon justify our assuming that no decision will be made in regard to the MacGregor report until the matter has been fully considered in the House? May we therefore have his assurance that every hon. Member will receive details of Mr. MacGregor's proposals in order that, in the first week back after the recess, we shall have an opportunity to discuss those proposals and also the astonishing situation in regard to local government?

Mr. St. John-Stevas: I do not know whether one can draw the conclusions that the hon. Gentleman has from what the Prime Minister has said, but I believe that it is extremely important that a statement of Government attitude on the report should be made to the House after we have received the report and after we have had an opportunity to study it. Whatever proposals are put forward by the Government must be debated in the House.

Mr. Alfred Dubs: Is the Leader of the House aware that there is great concern about the Government's proposals on nationality? Can he tell the House when the nationality Bill is to be published? May I urge him to allow a decent interval between publication and Second Reading, so that what will be a very complicated measure can be fully considered by all those concerned?

Mr. St. John-Stevas: That is a perfectly reasonable request. I inquired only this morning about the state of the Bill. It is not policy difficulties that are holding up the Bill. It is the drafting of what is a complicated measure. I should like to see it published before the recess. I fear that it may be slightly later than that, but certainly it will be at the earliest possible opportunity. I will pursue the matter again as a result of what the hon. Gentleman said. There must be a reasonable interval of time, to give hon. Members an opportunity to consider it.

Mr. Ioan Evans: In view of fact that major Government policies are being made and dealt with in written answers, may we next week have a Government statement about their policy on statements to the House? With regard to the Dublin talks, is it right that when there are hon. Members representing constituencies in Northern Ireland, and when Northern Ireland was discussed in those bilateral talks, the House should not know what is happening, while Members of the Dail are having a debate today? That cannot be right.

Mr. St. John-Stevas: Judging from the reports of the debate in the Dail, I do not know that those Members are particularly well informed about what took place at the


Dublin summit. But the text of the communiqué has been published. It is there for everyone to read. I reiterate that of course it is the custom of the House that major statements of policy are made to the House, when it is sitting. But this was not other than a routine meeting between Heads of State. I have pointed out that on all the previous meetings there was no statement, and on most of the bilateral meetings that have taken place between other members of the European Community and ourselves there was no statement, either.

Mr. Allen McKay: Do not I take it from the right hon. Gentleman's reply on the MacGregor report that every hon. Member will be supplied with a copy? May I also take it that there will be a statement next week from the Secretary of State for Industry regarding the situation, and that nothing in the MacGregor report will be implemented until the report has been fully debated on the Floor of the House?

Mr. St. John-Stevas: I am afraid that I cannot give the hon. Gentleman all the assurances that he requires. I certainly agree that we must do all that we can to make the report widely available. I will see how that can be done for the convenience of hon. Members. Once the Government have had time to consider the report and to make assessments, there will be a statement to the House, and I would presume that at some stage we would have a debate on the subject.

Mr. Bob Cryer: In view of the Prime Minister's obduracy in not making a statement, will the right hon. Gentleman at least ensure that the report of the debate in the Dail on the Dublin meeting is placed in the Library, so that we may see the kind of debate that ensues there, even if it does not take place here?
Secondly, may we have, early in the new year, a debate on defence, on the decision on the cruise and Trident missiles—a decision that is deeply opposed by many hon. Members on these Benches [Interruption.] It is opposed in the Labour Party outside by massive majorities. We would wish to congratulate those members in the East and West Midlands regions of UCATT—the builders' union—on expressing total opposition to work taking place on cruise missile sites.

Mr. St. John-Stevas: I do not think that we can have a debate on defence next week, although it may be relevant. With respect to the hon. Gentleman, I am dealing with next week's business, not with business after the recess. Defence is a matter of great importance and there is a variety of views in different parts of the House—and, indeed a variety of views on the hon. Gentleman's side of the House.
With regard to what I suppose is the Hansard of the Dail, that is not a publication to which I regularly subscribe, but I shall try to get hold of a copy of the relevant debate and place it in the Library. I hope, however, in the interests of public expenditure, that that will not constitute a precedent.

Mr. Dennis Canavan: On the question of the Scottish colleges of education, will the Leader of the House bear in mind that the Government were not merely defeated in the Scottish Grand Committee, but absolutely hammered by 40 votes to none? In view of that humiliating and unprecedented defeat, will he insure that the Secretary of State for Scotland does the

only decent thing left for him to do and makes a statement to the House next week saying that he is very sorry and that he will scrap his proposals to merge Craiglockhart and to close down Callendar Park and Hamilton colleges?

Mr. St. John-Stevas: I am afraid that I cannot give that undertaking, but I shall discuss the matter of the education colleges with my right hon. Friend I have given an undertaking to that effect. Meanwhile, I am grateful to the hon. Gentleman for his graphic account of the proceedings in the Scottish Grand Committee. After listening to his account, I almost felt that I had been present.

Consolidated Fund Bill and Christmas Adjournment (Debates)

Mr. Speaker: I have two brief statements to make. For the debate on Wednesday 17 December on the Second Reading of the Consolidated Fund Bill, hon. Members may hand in to my office by 9 am on Tuesday 16 December their names and the topics that they wish to raise. The ballot will be carried out as on the last occasion. An hon. Member may hand in only his or her own name and one topic.
The Consolidated Fund Bill includes the Defence and Civil Votes on Account for 1981–82, presented in House of Commons Papers Nos. 9, 10 and 11, and the Supplementary Estimates for 1980–81, presented in House of Commons Papers Nos. 7 and 8. It will be in order on Second Reading of the Bill to raise topics falling within the ambit of the expenditure proposed in these papers. I shall put out the result of the ballot later on 16 December.
I also remind hon. Members that on the motion for the Adjournment of the House on Friday 19 December up to eight Members may raise with Ministers subjects of their own choice. Applications should reach my office by 10 pm on Monday next. A ballot will be held on Tuesday morning and the result will be made known as soon as possible thereafter.

BILL PRESENTED

FORESTRY

Mr. Peter Walker, supported by Mr. Secretary Younger, Mr. Secretary Edwards, Mr. Alick Buchanan-Smith and Mr. Jerry Wiggin, presented a Bill to amend the Forestry Act 1967, and for connected purposes: And the same was read the First time; and ordered to be read a Second time tomorrow and to be printed. [Bill 17.]

Questions to the Prime Minister

Mr. Ivor Stanbrook: On a point of order, Mr. Speaker. This is a short point of order, but one which I am sure that you will appreciate. Today, my name appeared third on the list of hon. Members who sought to ask oral questions of the Prime Minister. Consequently, I sat quietly and patiently while questions were asked before mine, hoping and thinking that I would have my opportunity in due course. In fact, a dozen or perhaps 15 of my colleagues had the opportunity of asking questions of the Prime Minister, none of whom had tabled questions.
As we have a ballot for positions in respect of questions to the Prime Minister, would it not be possible to group questions that are the same? The first eight on today's


Order Paper were more or less identical, and it seems unfair that those of us who have taken the trouble to table questions to the Prime Minister—certainly if we are within the first two or three — should not have the opportunity to ask those questions in preference to the hon. Members who come into the House on the day and are called.

Mr. Speaker: The hon. Gentleman has a good point. There is a sense of grievance on each side of the House if an hon. Member has tabled question No. Q3 or Q4 and is not called. The House will be aware of what happened this afternoon. Ten minutes were devoted to question No. 1 and five minutes were left for question No. Q2. I was unable to call many hon. Members. It may be worth while for the Procedure Committee to consider what the hon. Gentleman said about questions that are identical. Again I place on record the fact that I believe that Prime Minister's Question Time is being spoilt by the form of questioning that takes place.

Social Security (Contributions) Bill

Considered in Committee.

[MR. BERNARD WEATHERILL in the Chair]

Mr. Andrew F. Bennett: On a point of order, Mr. Weatherill. The Committee is in some difficulty on this occasion. With regard to almost all social security measures during the previos Parliament and in this Parliament so far, the Department has issued notes which have made life a little easier for hon. Members who wish to table amendments. I am sure that you will appreciate that there is considerable difficulty in tabling amendments to this Bill. You will notice that no amendments have been tabled in the name of the Government or of any Conservative Back Bencher. Labour Back Benchers have had considerable difficulty in tabling amendments as well as in trying to ensure debates on various important topics.
I draw your attention, Mr. Weatherill, to amendment No. 1, standing in my name, which was an attempt to ensure that the Committee would have a proper debate on why it was necessary for the procedures to be rushed in order that all the stages on the Bill be taken today. New clause 2, to which my name is attached, was an attempt to ensure that we could have a debate on the whole question of the upper limit. Because of the difficulty in tabling amendments, neither proposal has been selected.
Is it possible within the selection of amendments to debate the central question why this measure should be stamped through the House within a week, and also the second question of the upper limit, which would enable us to make more sense of many of our earlier amendments with regard to alternative ways of raising revenue? I ask for your guidance on these matters.

The Chairman: I agree with the hon. Gentleman that this is an extremely complicated Bill. Fortunately, it is not for me to give guidance on it. That is a matter for the Government. The hon. Gentleman's amendments were not selected, but I can tell him that it will be in order for him to raise his points in the debate on clause 1 stand part.

Mr. J. W. Rooker: Further to that point of order, Mr. Weatherill. I am extremely grateful for the ruling that you have just given with regard to new clause 2. That may not be unconnected with the point about notes on clauses, which are almost traditional in respect of social security measures. Is there a printing error in the list of amendments? As you said, the Bill is complex, and it raises £1 billion of finance via a form of taxation. Can you say whether some amendments are missing because they did not reach the printer in time, or whether there is a separate sheet? I am not the only hon. Member to notice that not one amendment has been tabled by a Conservative Member. I just wonder whether they tabled them too late or whether, like my hon. Friend the Member for Stockport, North (Mr. Bennett), they were waiting for the notes on clauses. This is an astonishing situation — [Interruption.] — and it is no good the Secretary of State pooh-poohing the matter. It is not without significance that not one amendment by a Conservative Member appears on the Amendment Paper.

The Secretary of State for Social Services (Mr. Patrick Jenkin): Perhaps I can reply to the question about why my hon. Friends have not tabled amendments. I am


a little puzzled about the notes on clauses. I have been advised that we gave infractions for 30 copies of the notes on clauses to be placed in the Vote Office, and I have been informed that they were sent yesterday. I must tell the House that for some reason they do not appear to be available in the Vote Office. They were sent by my department to the Vote Office, and urgent inquiries are being made to ascertain why they are not available for hon. Members. They are intended as a help, as I am sure, Mr. Weatherill, you will understand. In a sense they are help offered by the Department, but they are not an essential part of the Bill.

Mr. Rooker: Further to that point of order, Mr. Weatherill. This is the first social security measure either in the previous Parliament or in this one whose Committee stage has been taken on the the Floor of the House. Previously members of the Committee have been known, and the Department has provided addressed copies to them. If the Secretary of State has slipped in 30 copies to the Vote Office without telling anyone—[Hon. Members: "He has not."] They are not there, but the right hon. Gentleman has admitted that he intended to slip them in. My hon. Friend the Member for Renfrewshire, West (Mr. Buchan) and myself, as Opposition Front Bench spokesmen, have not received them, nor has any of my hon. Friends. Until copies are available for hon. Members who wish to participate in the debate, may I request that we have suspension of the proceedings?

The Chairman: We cannot do that. My responsibility is to select the amendments that are submitted. In answer to his former point of order, I assure the hon. Gentleman that I do not look at the names on the amendments. I look to ascertain whether they are in order. I do not know from which part of the House they come.

Mr. Norman Buchan: I recognise your difficulties, Mr. Weatherill, and I realise that the problem is not ore of your creation, but one created by the Government. Over the last week or two the Government have slipped through a series of measures rapidly and often by sleight of hand which have been discovered by public and other pressure. They introduced his Bill on Monday, with the Committee stage to be taken on Thursday, and they have failed to provide the necessary information for Members on both sides of the House in the customary way.
I understand your difficulties in relation to suspending the sitting, Mr. Weatherill, but it is within the bounds of the Government's discretion, in view of this situation, in view of their failure to give their Back Benchers an opportunity to table amendments, and in view of apparent inability to reconsider the Bill and to get it right at Committee stage, for them either to withdraw the Bill or 10 proceed only to the Committee stage and leave the remaining stages for another day. We are being asked not only to rush through the Bill within three days of its being introduced, but to consider the remaining stages in one day. That is unprecedented; and to compound that, the Government have failed to give us the correct information in order for us to be able to continue the debate. I ask the Secretary of State to say either that he will withdraw the Bill or that we shall not sit beyond 10 o'clock tonight.

Mr. Paul Dean: On a point of order, Mr. Weatherill. It is a fairly recent practice on the part of

Governments of both colours to make available notes on clauses. As I understand it, that is purely at the discretion of the Government of the day. In my view, this Bill is exceptional in that it is accompanied by the Government Actuary's report, which gives full information as to the financial implications of the Bill, not quite clause by clause but virtually clause by clause. In view of that, and in view of the full explanation that was given to the whole House on Second Reading earlier this week, the Opposition are on weak ground in trying to pursue this point.
With regard to the specific points raised by the hon. Member for Birmingham, Perry Barr (Mr. Rooker) about the absence of amendments from this side of the House, it could be that, having studied the Bill and having heard the speech of my right hon. Friend the Secretary of State in introducing the Bill, Conservative Members were satisfied and did not wish to table any amendments.

Mr. David Ennals: Further to that point of order, Mr. Weatherill. I entirely agree with the point made by my hon. Friend the Member for Renfrewshire, East (Mr. Buchan) that this in no way your responsibility. However, I disagree with the hon. Member for Somerset, North (Mr. Dean). Will the Secretary of State tell us whether he can recall any precedents on this matter? I think he will agree that when I was Secretary of State for Social Services notes on clauses were circulated on every matter concerning health or social security. Simply to have the Actuary's report is an entirely different matter. We are dealing here with a situation in which a Bill is being rushed through the House, and putting Back Benchers at a great disadvantage. Is that not in line with the action that was taken earlier this week, when a statement was made in reply to a Select Committee report, when the Chairman of that Committee was not informed that a statement would be made? Is it not a reasonable request that if the Secretary of State has prepared the notes on clauses the House should stand adjourned until it has had an opportunity to see them? He intended hon. Members to see them, and he wishes us to see them, so let us see them before we proceed with the debate

Mr. Bob Cryer: On a point of order, Mr. Weatherill. You have said that this is a highly technical Bill. The House depends on precedent to a great degree. I am pleased that my right hon. Friend the Member for Norwich, North (Mr. Ennals), who was Secretary of State for Social Services in the Labour Government, pointed out that for several years notes on clauses have been provided. It is no good the present Secretary of State saying that they are not essential to the Bill, and that the Bill can proceed without them. The fact remains that it is a well-established precedent—a precedent to which the Secretary of State subscribes.
I do not think that it is unreasonable, in order to ensure that the precedent is followed, to suggest that this sitting should be suspended so that the information can be provided, read and comprehended. If the public at large heard this discussion, they would say that we were daft to carry on in this way. Apparently, the Secretary of State wants to help the House, but he cannot do so because of a procedural difficulty. I ask you, Mr. Weatherill, to consider suspending the sitting for as long as it will take to get the notes here and give us time to absorb them. I


suggest that an hour would probably be sufficient. If the notes were here, we could probably peruse them sufficiently within half an hour.

Mr. Patrick Jenkin: Perhaps I can help the House. When I convey to hon. Members the information that I have they may feel that they could have done more to help themselves. The notes on clauses have been in the Library since yesterday. There is a notice to that effect in the Library. The Vote Office, which is an office of the House, and not my Department, said that it was unable to accept the notes, and they were therefore placed in the Library.
Hon. Members will know that it has been the practice of the Library for many years to prepare notes for the guidance of Members. It does not seem to be unreasonable to suggest that in these circumstances hon. Members might have informed themselves of the notes that were in the Library. I respectfully suggest, Mr. Weatherill that we should make progress with the Bill. The amendments that have been tabled by Labour Members are abundantly clear, and it is clear that those hon. Members who have tabled amendments have understood the Bill admirably. They are seeking to make changes, and there is no reason to doubt the capacity of Labour Members to debate their amendments successfully. We shall try to give replies that, I hope, will satisfy the House.

Several Hon. Members: Several Hon. Members rose—

The Chairman: Order. Before I take any further points of order, I think that I should make my position clear. My responsibility is to ensure that those official documents that are necessary for the debate are in the Vote Office. I am not responsible for guidance notes or anything of that sort, so points of order to me on that subject are irrelevant. I cannot deal with them. I think that we should proceed with the Bill, because we have a very heavy day ahead of us.

Mr. Buchan: We understand your difficulties, Mr. Weatherill, and we accept your ruling. However, as you have expressed it very well in the past, it is partly your responsibility to ensure fairness to both sides of the House, and to ensure a free, well-informed and open debate. We are concerned about that and about the opportunity, under the guidance notes, to put forward the right amendments.
The Secretary of State is more than half disingenuous. I have served in several Departments, but this is the first time that I have been involved with the social security Department. It is also the first time that a Minister has failed to draw to the attention of Front Bench speakers the availability of notes. That responsibility is his, and it has not been fulfilled.
Some of us have been working hard in the Library for the past three days trying to understand some of the complexities of the Bill. At no time were the notes brought to our attention. However it was done, there was certainly a slip-up in the delivery of information to the Opposition Front Bench.
The easy way out of the difficulty is for the Secretary of State to join us in asking for a suspension so that we can study the notes and, if necessary, prepare manuscript amendments which, I hope, you will consider carefully, Mr. Weatherill.

Mr. Ioan Evans: Further to that point of order, Mr. Weatherill. Occasionally papers are delayed in Committee upstairs and the practice is to adjourn for a short while so that hon. Members may study the papers, because that expedites the proceedings.
An eight-page document is now available, though the Secretary of State did not know when he arrived here that copies were available in the Library. If he had known, he would have informed the Committee. He became aware of it only as a result of information that reached him later.
The purpose of the change in our procedures and the provision of notes on clauses is to enable hon. Members to understand clauses better, and it is, therefore, a method of expediting discussion. A suspension of the sitting for half an hour would allow some of us to obtain the document, and we could return for a better-informed discussion.

Mr. John Farr: Further to that point of order, Mr. Weatherill. A number of us are staggered that the Opposition want time to consider the notes. The whole Bill appears to us to be childishly simple. Two documents have been made available in the Vote Office, and I assure the hon. Member for Renfrewshire, West (Mr. Buchan), whom we welcome to the Opposition Front Bench, that the only reason why my hon. Friends and I have not tabled amendments is that we understand the Bill with great clarity and are more than satisfied with it. It is unnecessary for us to consider wasting the time of the Committee to allow Labour Members the chance to absorb what they should know anyway if they were on top of their jobs.

Mr. Christopher Price: Further to the point of order, Mr. Weatherill. We all understood and agreed with your ruling on your responsibility as regards papers in the Vote Office, but beyond that the Chair has a responsibility in relation to established precedents of the House. The Secretary of State has told us candidly that a precedent has been broken. His first explanation was that there had been a breakdown in communications between the Elephant and Castle and Westminster. The second explanation was that, for some reason or other, the Vote Office refused to accept the papers.
That sort of thing has happened before. We understand that the notes are available. I urge a suspension of the sitting, because you know, Mr. Weatherill, as well as I that a short suspension can often save an enormous amount of time later. We do not want to go on like this all night, as we did on a previous occasion which you may remember.
If, Mr. Weatherill, you will not accept a suspension proposal, will you accept a motion to report progress? I agree that we have not made much progress yet, but such a motion is one of the established ways of coping with the sort of difficulty that the Secretary of State has put us in. I can remember many precedents—for example, on the Abortion Bill in the 1960s — when the device of reporting progress, however much or little progress had actually been made, has been used so that Members can study a Bill and get on smoothly. Clearly, we shall not get on smoothly as if we go on as we are.

The Chairman: I must rule on that major point of order. I cannot accept a motion to report progress. As the hon. Gentleman said, we have not made any progress. I


am aware that guidance notes have sometimes been put out by Departments, but sometimes they have not. It is not an established precedent that every Bill should have guidance notes.
The most helpful suggestion that I can make is that we should proceed with the first group of amendments—the discussion will probably last for at least an hour—and that hon. Members who have not seen the document, which has been available, I understand, in the Library for day, should take the opportunity to look at it. If they wish to submit manuscript amendments, I shall certainly consider them. Shall we proceed with the first group of amendments?

Clause 1

INCREASE IN CONTRIBUTIONS

Mr. Rooker: I beg to move amendment No. 2, in page 1, line 12, leave out '£27' and insert '£28'.

The Chairman: With this, it will be convenient to take the following amendments:

No. 3, in page 1, line 12, leave out '£200' and insert '£190'.

No. 4, in page 1, line 12, at end insert—
'(1A) In section 1(2) of the Social Security Pensions Act 1975 after the words "not more than 49p less than" shall be inserted the words "or not more than 99p more than'".

Mr. Rooker: It may be convenient for every other hon. Member to nip down to the Library to read the guidance rotes, but I have to present all the amendments. My hon. Friend the Member for Renfrewshire, West (Mr. Buchan) will wind up for the Opposition, but it will not be possible for me to read the notes.
I start by distancing myself from amendment No. 3. No doubt my hon. Friend the Member for Stockport, North (Mr. Bennett) will wish to speak to that amendment. Amendments Nos. 2 and 4 are linked.

Mr. Ioan Evans: Is my hon. Friend aware that the notes and clauses are still not available in the Vote Office?

The Chairman: Order. The Secretary of State said that the documents were available in the Library, not in the Vote Office.

Mr. Rooker: It seems that there is probably a sackload somewhere in the Library, but no one has told the Library staff about it.

Mr. Andrew F. Bennett: Is my hon. Friend aware that some of us went through the Library box on the Bill yesterday evening and the copies were not there? Does he agree that it was disgraceful for the Government to send the documents to the Library yesterday when they knew that if we wanted to table amendments that were not starred and were therefore, likely to be selected, we had to put them down on Tuesday? Was that not a disgraceful but of trickery by the Government?

Mr. Rooker: My hon. Friend is correct. Of course, the box in the Library does not contain all the documents shown in the index. It is well known that documents placed in Library boxes go adrift. The Library staff are always complaining about it. I know that the Low Pay Unit brief was missing from the box a few hours ago, because my copy was required for making a number of copies.
Amendment No. 2 seeks to substitute £28 for £27 as the weekly earnings that trigger off payments of national

insurance contributions. Several hon. Members referred on Second Reading to the fact that the increase was a hidden form of tax on the lowest paid. Most people do not appreciate that the national insurance system does not work like the income tax system. Once one passes the threshold at which contributions become payable, they are payable on earnings below the threshold, which is not the case in the income tax system.
It is estimated that for that reason about 50,000 of the lowest-paid workers in the country will have a massive increase in their marginal rate of tax from next April, because they will pass into the earnings level at which they are required to pay national insurance. I shall give the Committee some examples so that we can see the scale of what the Government are proposing. The problem was referred to extensively in the LPU brief, and I do not want to reiterate what was said on Second Reading.
I am pleased to see a Treasury Minister on the Government Front Bench. I hope that he will remain throughout the proceedings. The Chief Secretary to the Treasury said on Second Reading:
The hon. Member for Isle of Ely (Mr. Freud) said that there is a poverty trap difficulty in what is being proposed. I cannot deny that. It is a subject more suitable to the close, detailed examination that only a Committee stage can provide".—[Official Report, 8 December 1980; Vol. 995, c. 1072.]
We could examine the Bill in more detail if we were provided with more information.
Let us examine part-time workers. In 1979, part-time workers worked an average of 20·4 hours per week. The average pay was between £26 and £28. That is the point at which they are to be put into the national insurance system.
I shall give some examples of people who will, because they earn an extra £1 or 50p, be subject to a national insurance impost in excess of £2. That will put them in an invidious position. I refer to wages council industries for which figures are available. A 19-year-old "service worker", working as a cloakroom/toilet attendant or night porter in a hotel, will earn £54 for a 40-hour week in London. It is not uncommon for such workers to split jobs. For 20 hours' work, that person will earn £27 a week and, therefore, be required to pay national insurance contributions of more than £2 a week.
An 18-year-old "regular worker" working in a bar, pub restaurant or club outside London earns £57 a week, or £28·50 for a 20-hour week. Such a person would still be caught if our amendment were accepted, because the amendment increases the figure only to £28. There is a limit to how far we can go in amending the original Act to give the Government scope to move away from the original intention, which was to make the lower earnings limit equivalent to the old-age pension. Since 24 November, the pension has been £27·15 a week. Therefore, the Government's provision is within the law.
As I made clear on Monday, the Government have changed the law. The old-age pension no longer goes up in line with average earnings. It goes up in line with prices. In this case, the price rise is less than the earnings rise The pension should have gone up to £28·30 if the Government had not changed the rule.
We are trying to match the original bipartisan, consensus approach to the way in which pension details are organised. That approach has been changed by the


Government. We chose the £28 figure because that is the nearest to what the pension would have been had the Government not changed the rule.
We have not had a chance to cost our amendments, so I hope that Government Ministers will not tell us that we have not provided for the increased costs in our amendments. We have made some attempts to gain increased revenue, although you in your wisdom, Mr. Weatherill, have not selected all our amendments. We cannot cost this amendment because there has not been time to table the necessary questions. We have been pushed at a speed which is not commensurate with making good law. I should be interested to know the cost of our amendment, because that would help my hon. Friends when drafting manuscript amendments.
4.45 pm
The Government's view is contrary to the spirit of their election manifesto. It is contrary to the reality of the social security and income tax system in Britain. The Government are pushing more people into the poverty trap. The Chief Secretary has admitted that. I am surprised that some of the so-called experts who have campaigned for many years on the interaction of tax on the social security system are missing from the Government Benches. They know that the first debate is on a crucial subject. They know that more people will pay more combined tax and social security at a lower rate of earnings than is good for the nation.
I shall quote from "The Wealth of Nations" on the consequence of taxing the low-paid. I suspect that Government Members are under strict instructions to keep their mouths shut and keep out of the Chamber because the Government wish to bounce the Bill through the House.
Adam Smith said:
If direct taxes upon the wages of labour"—
taxes mean social security contributions in this case—
have not always occasioned a proportionable rise in those wages, it is because they have generally occasioned a considerable fall in the demand for labour.
What is the Government's estimate of the increase in unemployment following the enactment of the Bill?
Adam Smith continued:
The declension of industry, the decrease of employment for the poor, the diminution of the annual produce of the land and labour of the country, have generally been the effects of such taxes".
He meant taxes on the low-paid. By not raising the lower earnings limit to a level which is high enough to meet the requirements of the law, and certainly by not raising it to meet the requirements of the 50,000 low-paid who will be pushed into paying an impost of £2 a week for crossing over the threshold, the Government are doing a great disservice to the nation.
I do not intend to stray into areas which do not relate to the amendment. I understand that we are to be allowed a debate on the upper earnings limit on clause stand part. I doubt that there will be much left to discuss then, but that is subject to what my hon. Friends find in the notes on the clauses.
I ask the Government to come clean and to itemise the cost. The Government will say that they are bound by the law. However, they could have tabled a paving amendment. We are asking only for a 99p variation between the old-age pension and the lower earnings band. That is not an open-ended commitment that can be abused.

The amendment is responsible. I hope that the Government show some good will during the passage of the Bill. The Bill is being bounced through the House. It is a massive tax measure which involves a £1 billion impost and will raise about £2.4 billion in 1981–82.
There are one or two other points that I and some of my right hon. and hon. Friends should like to raise on this group of amendments, but we are in Committee and can raise them later. Therefore, I shall wait until some of my hon. Friends have spoken and the Secretary of State has given the Government's view on the amendments.

Mr. Paul Dean: I have some sympathy with what the hon. Member for Birminghan, Perry Barr (Mr. Rooker) said. He reinforced the matters that have been raised with us by the Child Poverty Action Group and, in particular, by the Low Pay Unit about the possible regressive effect on the lower earnings limit. The hon. Gentleman's amendment proposes a very marginal change in this respect to increase the lower earnings limit from £27 to £28. I shall listen with interest to the Minister's reply to the amendment.
The Committee should address itself also to a wider question which in my opinion, is directly relevant to the amendment— namely, what the loss of revenue would be if the amendment were accepted. I am sure that whichever Minister replies to this group of amendments will be able to tell us the financial implications. In the Government Actuary's report which is associated with the Bill, the estimate for the surplus on the national insurance fund, taking into account the revenue which will accrue as a result of the Bill and the outgo which is already agreed, will be £39 million in 1981–82. In my opinion, that is a very small surplus in view of the large outlay that is involved.
If we accept this amendment and the similar amendments to which we shall come later, will we endanger the firm commitment that we have to maintain the real value of benefits? The pension and other long-term benefits—the retirement pension and widow's benefit are by far the biggest proportion of outlay—were increased by 16½ per cent. for the year beginning 24 November this year. That is a commitment that goes through this year and, no doubt, will be continued into a further increase in benefits in the year beginning November 1981. We are obliged to ensure in the Bill that there is sufficient revenue to the national insurance fund to meet these firm commitments, some of which are already in operation.
I hope, therefore, that my right hon. Friend will be able to respond to what the hon. Gentleman said. I fully appreciate that the hon. Gentleman has not had time to do the full research. So I hope that my right hon. Friend will inform the Committee what loss of revenue will be involved and what the implications are for the firm commitment on expenditure that the Government have already embarked upon for pensions and other benefits.

Mr. Rooker: The hon. Gentleman referred to the Government Actuary's report. An interesting question arises from appendix 3 to that report. The Government Actuary's estimates arrive at a surplus of £39 million on the basis of an 11 per cent. uprating of benefits in November 1981. That makes nonsense of all the figures. Will the Secretary of State and the Chancellor of the Exchequer abate those benefits under the Social Security (No. 2) Act 1980 so that the benefits will not go up by 11


per cent.? That would throw the Government Actuary's forecast of any surplus and deficit completely haywire. We want this information now. Unless the facts about next year's uprating are made available, some of the costings the amendments or the Government Actuary's forecast are nonsense.

Mr. Dean: I think the hon. Gentleman knows very well from his previous experience that it would be highly unusual for Governments to speculate on the likely level of uprating nearly 12 months from now.
We know that there is a firm commitment for the uprating of the long-term benefits by 16½ per cent. and of the short-term benefits by a lesser amount. That is already in operation and has to be paid for. The Government Actuary has given his calculations in that respect. If we are to accept the hon. Gentleman's amendments regarding the lower earnings limit and also the upper earnings limit, together with a number of later amendments, what would be the likely effect on the national insurance fund? Would that fund then be able to meet its commitments? if the fund is unlikely to be able to meet its commitments—the Government Actuary's calculations suggest that the margin is very narrow—we are saying, in effect, in adopting the amendment that we are withdrawing from the pledge made regarding the increase in pensions and other benefits which began on 24 November.
There is another matter which I think is relevant to the amendment and to later amendments. It concerns the balance which was struck, on the contributions side as well as the benefits side, in what is now called the Barbara Castle pensions Act. A balance was struck at the time and accepted by the then Opposition. So we now have, and I rejoice in it, a broadly bipartisan approach to the Castle Tensions Act. I am profoundly relieved that we are not now discussing a possible Jenkin pensions Act. If we are to take that bipartisan approach seriously, an approach which was agreed after much labour, we must be careful that we do not upset the balance between lower earnings limits and upper earnings limits, that being part of the bargain which was struck at the time. I hope, therefore, that my right hon. Friend will be able to give us information on those two matters.
I listened sympathetically to some of the hon. Gentleman's arguments, but if my right hon. Friend is able to convince the House of the need for this additional revenue and the need to preserve the balance and to maintain the compromise in the Barbara Castle pensions Act I, for one, shall hold the view that those arguments outweigh the other arguments that have been adduced by the hon. Member for Perry Barr.

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Mr. Ennals: I was interested in some of the points raised by the hon. Member for Somerset, North (Mr. Dean). The bipartisan approach, which I am certain was warmly welcomed, came when Mrs. Castle and the late Mr. O'Malley were Ministers, which was in a very different age, when there were genuine attempts over many months to find such an approach for the new pension scheme. I understand that the hon. Gentleman does not want to see anything which would damage that, but we must accept that the bipartisan approach to pensions, the national insurance fund and benefits has been totally destroyed by the Government's actions over the past 18 months. Whatever they may have said before the election,

they have introduced a whole series of Bills, until this one, concerned only to reduce benefit entitlements for the elderly and those on short-term benefits, including the unemployed.
The Bill before us has a different role. After two Acts which removed the entitlements of national insurance beneficiaries, the question whether it has been introduced to ensure that there is enough money in the fund to fulfil the commitments to national insurance recipients is irrelevant. The Secretary of State himself in the Second Reading debate on Monday referred to what is proposed as a surcharge. That reference is to be found in column 947 of Hansard of 8 December. It is a surcharge. The Chief Secretary to the Treasury recognised that the Bill introduced a piece of taxation, that it had nothing to do with benefits but was a quick—and, we thought, very unfair—way simply to raise additional revenue to rescue the Government from the crisis that they have got into
Therefore, to analyse whether the motive was to enable the fund to fulfil its commitments shows a naivety on the part of the hon. Gentleman that I would not have expected from him, with all his experience of the subject in office and in the House and in Standing Committees. As my hon. Friend the Member for Birmingham, Perry Barr (Mr. Rooker) said, we can see this only as a piece of straight taxation. I was going to say "straight but crooked". It is certainly straight but unfair.
The amendments, modest as they are, aim to make the changes less unfair. My hon. Friend rightly pointed out that on Second Reading it was agreed that we should look again at the poverty trap. I wish to draw upon the notes made available to us all by the Low Pay Unit, because they are valid. The unit says:
The problem is compounded for the families of at least 90,000 low paid workers who are caught in the poverty trap by virtue of the fact that they receive Family Income Supplement and other means-tested benefits. In addition to the 37¾p in the pound deductions for income tax and National Insurance, each additional pound that such families earn also reduces the amount of benefit they are entitled to. The effective marginal tax rate faced by those caught in the poverty trap thus turns out to be either slightly below or slightly above 100 per cent. Indeed the latest DHSS figures indicate that a married man with two young children will have a total disposable income of around £63 a week whether his weekly wage is actually £39 or £79. The Government's decision to raise National Insurance contributions can only help to deepen the trap that these families find themselves in.
That is illogical, because during the whole period when the Secretary of State was in Opposition he was concerned, as I was, with the poverty trap. We were devising methods, such as child benefit, to try to narrow it. The Bill can only widen the poverty trap and bring more people within it.

Mr. Patrick Jenkin: I am grateful to the right hon. Gentleman for reminding the House of the debates that we had in earlier manifestations. Perhaps I may in turn remind him of the argument that he and his hon. Friends used to advance from the Government Dispatch Box when these points were made that two of the main means-tested benefits which give rise to the phenomenon to which the Low Pay Unit draws attention, family income supplement and the housing benefit, run on—FIS for a year and housing benefit for six months.
Certainly, for the FIS benefit, the uprating of the entitlement figures each year means that there is not the snapshot effect that the Low Pay Unit has drawn attention


to in its report, but a more dynamic effect, which greatly mitigates the phenomenon to which the right hon. Gentleman is drawing attention.
The Low Pay Unit does not take account, in any of its figures, of that six-month or 12-month run-on. I remember the right hon. Gentleman advancing those same arguments from this Box.

Mr. Ennals: I accept the value and significance of the run-on. My point is that the proposals before the Committee will deepen the poverty trap. The right hon. Gentleman cannot question that. He cannot question, either, that people on very low incomes — including many part-time workers earning between £27 and £29 a week—who would not have been touched by tax will be brought into payment.
That is one of the reasons why my hon. Friends on the Front Bench have tabled an amendment to try, at least modestly, to raise the floor. I wish that it had been possible to raise the floor much higher and that the law had entitled us to raise the ceiling much higher, too, as the right hon. Gentleman accepts that this is a form of taxation. It is a form of taxation that is grossly regressive and gives easy opportunities for those at the higher end of the earnings rate to escape from its real significance, because of the ceiling.
Therefore, I support the amendments, although I think that they are far too modest. They are as far as it is possible for us to go in this debate.
I hope that the right hon. Gentleman will tell us some of the financial implications of what is being done. I did not share the belief of the hon. Member for Somerset, North that the estimated surplus, in the Government Actuary's view, was running dangerously low. That is why I said that I did not think that this measure was introduced to deal with the problem of a very low balance in the fund. It is introduced to deal with the deplorable economic situation that the Government have got themselves into.

Mr. Frank Field: The argument of the hon. Member for Somerset, North (Mr. Dean) was persuasive—or was it? He said that the argument for the changes that the Government have made — that is, changing the lower limit at a lesser rate than that at which they are changing the higher limit—was to maintain the real value of benefits. Some hon. Members pointed out that the real value of some benefits was not being maintained. Those are the short-term benefits in the national insurance scheme, which are being cut for the first time since the 1930s—in fact, the first time since 1928—by five percentage points.
The hon. Gentleman quickly recovered to say that the main benefits that we were considering were those for the long-term beneficiaries, particularly pensioners and widows. Is it true to say that the Government will maintain the value of those benefits? If not, presumably the arguments supporting the differential changes between the floor and the ceiling of contributions in the national insurance scheme will begin to fall apart.

Mr. Paul Dean: I was endeavouring to advance two arguments. The first is by far the greatest cost in the national insurance scheme and lies with retirement pensions and widows' pensions. The real value of those pensions is being maintained.

Mr. Ennals: It is not.

Mr. Dean: In fact, their value is being somewhat improved this year as a result of the 16½ per cent. increase. No one can deny that. The facts are well established. I note that the former Secretary of State, the right hon. Member for Norwich, North (Mr. Ennals) is nodding.
The totality of benefits was increased on 24 November. The increases will ricochet into forward years and they will have to be paid for. My judgment on the Government Actuary's figures is that the increases in the Bill will be needed to pay for those increased benefits. If I am wrong, I am sure that my right hon. Friend will correct me when he replies to the debate.

Mr. Field: I am grateful for the hon. Gentleman's intervention. One of the problems is that the contribution years as laid down in the Bill do not coincide with the benefit years. If the Bill is enacted, it will take effect from April 1981. The pension increases announced on 24 November will run for a full calendar year. Therefore, there will be an overlap of six months.
I ask the hon. Gentleman to take his argument forward. The rate of the retirement pension will be partly determined by this measure, but it will be determined in the early part of next year for November 1981. Is the real value of that benefit being increased? We know from statements made by the Chancellor of the Exchequer that the real value in one sense will not be maintained because of what is called the overpayment of 1 per cent. this year.
I asked the Library to make researches to ascertain whether there was another example of a Government, at the beginning of a review period, making a statement to the effect that pensions, which the hon. Member for Somerset, North has said are one of the main benefits that take up much, if not most, of this expenditure, were to be increased by less than the anticipated rate of inflation—in other words, a cut.
The Library found that the only other Government who announced that the coming pension increase would amount to a cut in money terms were the one in office in 1920. The Government then said that they were confident that there would be a real increase in pensions, irrespective of the review period in 1920. as the boom had collapsed and there would be a fall in prices.
It seems that the Government have another first. We have had an announcement that the major national insurance benefit—that paid to old-age pensioners— will be cut in real terms next year. The Government have made an announcement to that effect. We must consider that pledge, promise or threat in the context of the floor and ceiling of the national insurance fund.
As usual, my hon. Friend the Member for Birmingham, Perry Barr (Mr. Rooker) explained clearly the reasons why the opposition would ask for the support of the Committee—

Mr. Reginald Freeson: It may be that my hon. Friend has overlooked a rather important issue in responding to the reasonably put argument of the hon. Member for Somerset, North (Mr. Dean). The balance to which the hon. Gentleman referred was struck in 1975. There was written into the 1975 Act for the uprating of pensions the earnings link. That has been killed by the Government, with the consequence that this year alone a


£2 loss will be experienced by pensioners when account is taken of the sum by which they would have benefited had the Government not introduced the first Social Security Bill earlier this year. That is an important factor to bear in mind.
The loss of £2 followed an earlier effective cut, in that there was a failure to make food certain excess of earnings figures over price figures early in the year. That produced a loss of 50p to 60p a week. This year, pensioners suffered an effective loss of about £2·50 per week before the Bill was introduced.

Mr. Field: My right hon. Friend has put clearly the difference between the two major parties on how pensioners are being treated. That will be taken into account during our discussions in Committee. The Government rightly say that they made up the shortfall by the pens tort uprating that took place in their first year of office. However, they did not make good the shortfall for the short-term national insurance benefits. There was a cut in the first year, followed by a 5 per cent. cut in the second year. It is as plain as a pike staff that there will be a cut in the third year.
Before my right hon. Friend intervened, I was about to turn to the arguments advanced by my hon. Friend the Member for Perry Barr. The change of one percentage point may not seem to be particularly important to sonic, but it is especially significant for those at the bottom of the earnings pile. My hon. Fiend was right to draw the Committee's attention to the importance of the change to part-time workers. His homework was better than mine, in that it included references to the new earnings survey to establish the groups of workers and the numbers of part-time workers who would be affected by the change.
My hon. Friend advanced the valid argument that we must all make a distinction between national insurance and income tax increases. In the public's mind there is often confusion between the two We have a threshold, in the income tax system. That threshold is determined by personal allowances. As we move over the threshold we begin to pay tax at about the threshold point. However, the national insurance scheme is similar to what the old exemption system used to be in our income tax system, until Austen Chamberlain changed it in his famous Budget of 1920 or 1921.
Until that Budget, tax allowances were valuable only if a person's income was below a certain level. Once the threshold was crossed, the whole of a person's income came into tax. Austen Chamberlain created the beginning A the personal allowances system by allowing everyone co claim value of the allowances and not to pay tax on the equivalent of the allowances — the allowances Hatched against one's personal income.
There is a difference between crossing the tax threshold for the low-paid, who begin to pay tax only on the next £1 of earnings, and crossing the national insurance threshold, whereby the low-paid begin to pay tax on all their earnings up to that point as they would have done ender the old exemption system of taxation. That must be borne in mind and linked to my second point, which concerns the changes over the past few years in the threshold for national insurance contributions and the changes in the tax threshold, which are important in this debate.
If we cast our minds back, we will recollect that we used to live in a world where the threshold for national

insurance benefits was well below that for taxation. The two are now almost in alignment. My hon. Friend the Member for Perry Barr made the point that as the low-paid crossed the national insurance threshold they will pay tax at 7·75 per cent. on all their earnings up to that point, unless we are lucky with our amendment. They will also begin to pay tax on their marginal rates of tax. A cruel pincer movement will operate against them.
Such arguments would not carry that much weight if the national insurance contributions bore only the burden that they were meant to bear in the original national insurance scheme. I was lucky enough to catch your eye, Mr. Weatherill, on Second Reading, and I drew to the attention of the House the fundamental change in the size of the contribution that comes from the Exchequer. That is relevant to our amendments, particularly No. 2.
Beveridge considered it important that we should all earn our right to benefit. There were powerful arguments for that then, and there may be today'. He won the case for that argument on the basis that if there were a poll tax everyone would feel that he had earned his right to benefit and because that poll tax would bear heavily on low-paid workers we could expect to claim only a certain amount of revenue from the poll tax for the whole national insurance fund. Beveridge envisaged that as rights to benefit grew in the post-war years the employee and employer contributions should fall as a percentage of the total fund and an increasing percentage should be picked up by the Exchequer.
Unfortunately, I do not have the exact figures with me, but they are in the 1944 White Paper on the Beveridge report. If I remember correctly the Exchequer contribution rose sharply throughout the post-war period until it was about 70 per cent. in 1965. In other words, the Exchequer was picking almost three-quarters of the cost of the national insurance fund, the cost being borne by general taxation, which was clearly much more progressive than the proportional system of taxation, which is what the income tax system is for most taxpayers in 1980–81.
Governments of both parties allowed that major change to occur in the post-war period, but particularly the Conservatives. In 1961, with the introduction of earnings-related contributions, the Government decided that there would be no Exchequer supplement to those contributions. We shall return in later amendments to the considerable fall, under the Bill, in the Exchequer contribution from 18 to 14 per cent. To some people the change from 7·75 to 6·75 per cent. may seem trivial, but it is important for the reasons that I have tried to outline. As my hon. Friend the Member for Perry Barr said, as soon as a person crosses the national insurance threshold he pays tax on every pound of earnings.
It is important also in a second respect. The threshold for national insurance contributions is now closely aligned to the tax threshold. At that stage, a person is also beginning to pick up a tax bill. Thirdly, over the post-war period we have seen that much more of the national insurance fund financed from contributions from employers and employees and a very significant decrease in the Exchequer contribution.

Mr. Patrick Jenkin: That is not true.

Mr. Field: I shall happily give way to the right hon. Gentleman if he wishes to take up that point.
An increasing burden is being put on employers and employees, and changes in the rate are therefore that much more important than they would have been had the Exchequer, for example, been footing 70 per cent. of the bill.
If we are concerned about the low-paid and the burden of taxation that they bear, there are powerful arguments for amendment No. 2. My right hon. Friend the Member for Norwich, North (Mr. Ennals) also stated that we cannot view those arguments as separate from the arguments about the poverty trap.
In Opposition, one tends to think of the poverty trap as having a snapshot effect. In Government, one always stresses what wonderful administrative changes have been brought about so that people are not caught in the trap. The real test is how our constituents are affected by the changes. We do not have as much contact with our constituents as we should like, as we have many other tasks to perform. However, I know of people in my constituency who have been affected by the snapshot effect of the poverty trap, as the Secretary of State called it. They have not been released by the different time lags of changes in benefits and tax rates. The poverty trap argument must be taken on board. We know of families affected by it, in spite of the fact that the intellectual and academic arguments say that it is as a figment of our imagination.
I am puzzled by amendment No. 3. I am an abolitionist for the ceiling on national insurance contributions. I am puzzled why my hon. Friends, whom I trust on these issues, ask us to support an amendment that appears to be a contradiction of our normal stance.
I had the benefit yesterday of speaking to someone who helped to devise the 1975 Pensions Act. I was truly puzzled by the explanation that the Financial Secretary gave on Second Reading. I thought that perhaps I had missed something in the background to the 1975 Act, as though the ceiling was of crucial importance to the agreement that we had made with the occupational pension funds. If so, that argument should be spelt out. If that agreement is torn up, the Government have only themselves to blame. The Treasury has destroyed the consensus between the parties on pensions and must take the responsibility if the failure, break-up or tearing up of consensus is followed through.
The real reason why the formula in the 1975 Act of six and a half or seven times the minimum was thought of was that it was then considered important to limit the contribution on those bands of income before taxpayers reached the old surtax rates. In other words, we did not want extra contributions or a proportional contribution from those taxpayers who would have then crossed the surtax band—now called the higher rates of tax.
One change, particularly from the 1979 Budget, is that the thresholds for the higher rates of tax were changed dramatically. There is, therefore, a powerful case for saying that, given that fact, there is not now a problem of lifting the ceiling—certainly not in the terms that some of my hon. Friends have thought—and linking people into the surtax bands as well.
As an abolitionist, I am puzzled that some of my hon. Friends should have put down amendments to bring the ceiling down from, I believe, £200 to £195. There is a powerful case for abolishing the ceiling. We on the Labour

Benches must, sadly, accept that we shall be unable to influence the way the Government spend the revenue that arises from the Bill.

Mr. Rooker: In case my hon. Friend concludes sooner then I had expected, and in order to muddy the waters a little, may I make one point clear? There were two Acts in 1975—one on pensions and one on social security. Much of those Acts was based on the 1973 legislation, which was the responsibility of the Conservatives.

Mr. Field: I am grateful for that intervention, because it reminds me of a point that I should have stressed but did not, which is that if there was agreement between the parties on pensions we have to ask at what cost. The answer is that the scheme was satisfactory to the occupational scheme, and that in itself seems a good reason for questioning whether the State—that is, the taxpayer— obtained a good enough deal. In considering whether the private sector is satisfied with certain underwritings from taxpayers, perhaps we should consider whether the taxpayer's interest was pushed hard enough.
The argument for lifting the ceiling is separate from that about whether the Government are right to bring in the Bill and to increase taxation by £2 billion-plus. There is a powerful Socialist argument for raising the ceiling on contributions, but now there is a High Tory argument for it as well. Although the Government will find the Bill helpful in meeting the public sector borrowing requirement this year, they are putting in their legislative programme a time bomb that will make it that much more difficult for them to achieve their targets in the coming year. That is why Labour Members keep returning to the real cuts in benefits by the Government.
If earnings-related supplements are phased out and national insurance benefits are cut in real terms, more and more families and individual claimants will be pushed on to means-tested assistance. The more that happens, the bigger will be the bill to be met either by the taxpayer or from the PSBR to pay the supplementary benefit budget. The more claimants that are kept within the national insurance scheme, the easier it will be in coming years in this Parliament to reduce to the PSBR as a proportion of GDP, which is one of the Government's major objectives.
While there is that High Tory argument, there is also a powerful Socialist argument. We wish to have a society in which people are not made dependent on means-tested benefits but claim them as of right, as citizens, free of means tests. The Treasury Bench talks about securing consensus, and here is a new consensus growing between both sides on the reforms needed in the national insurance fund to secure the Government's objective of meeting the PSBR and our objective of freeing people from means tests and making sure that those who have been conscripted into the army of the unemployed to fight inflation do not bear an undue proportion of the cost. Those of us who are lucky enough to remain in jobs will then put much more into the national insurance fund so that the unemployed can draw decent benefits as of right and free of means tests. I am puzzled by amendment No. 3, which seeks to lower the ceiling. I should prefer it to be abolished for those powerful arguments.
We must bear in mind, in considering amendments Nos. 2 and 3, that we are dealing with a Government who have not only cut the real value of short-term national


insurance benefits but have given notice—the first time that it has happened since old-age pensions were introduced in 1908—that in the coming review pensions will be cut in real terms by 1 per cent. below the inflation rate. It is another doubtful first for the Government.
Some hon. Members may feel that a 1 per cent. change in contributions to the national insurance scheme is neither here nor there. I have tried to point out why it is important for low-paid workers. Their contribution is based on every pound they earn once they cross the threshold. That threshold is near the tax threshold, so that at about that point they start to pay tax as well. Many of them also begin at that point to lose other forms of means-tested help. My right hon. Friend the Member for Norwich, North pointed out the whole bands of income in which considerable numbers of families will be unable to improve their position.

Mr. Andrew F. Bennett: I do not want to venture now into debating the removal of the upper limit, because we have had a clear undertaking that if we keep away from that subject while we debate the amendments we shall have an opportunity to explore it when we reach the clause stand part debate.
With my hon. Friend the Member for Barking (Miss Richardson), I tabled amendment No. 3 in an attempt to discover how the Government arrived at their figure of £200. If I obtain a satisfatory answer, I shall not press the matter to a Division. If not—and so far we have not had satisfactory answers on this point—I hope that we shall be allowed a separate vote, because the matter is one of a separate principle.
We tabled the amendment because the Government provided a lot of information about how they were increasing the amount they wanted to raise through national insurance, but surprisingly they did not make clear what would happen to employers. They did not explain, either, why they had decided to break away from precedent and, in setting the upper limit, go for the top of the range rather than stay at the mid-point.
The regulations suggest that the upper earnings limit should be between six and a half and seven times the basic rate. That works out at between £176 and £203. Over the years, the Government have always gone for a mid-point of more cm less seven times the pension rate. The current mid-point of the range is £163, but the current operative figure is £165. In this new case, the Government have deliberately chosen to go virtually £10 above the midpoint. Why? In spite of their being pressed on Second Reading on Monday, they gave no explanation for not following custom and practice in this matter.
The only explanation I can imagine is that, they must have asked themselves by how much pensions would have risen under the old regulations. The rise would have been based on whether earnings or prices had risen more. If pensions were increased in line with earnings, which the Government did not do, they would have reached £29 or slightly less. If that figure is multiplied by seven, the result is just over £200. It seems that the Government were assuming, in fixing the upper limit, that pensions would go up by the amount by which they should have risen but for the earlier legislation to take away the linkage. That is a perfectly reasonable explanation. Perhaps the Government could offer an alternative one.
However, it appeared from the figures that the Government thought that pensions should have risen to

£29 then multiplied that by seven, which comes to about £200. That is how they produced some logic for the figure of £200. If that logic worked for the upper limit, they should have applied the same logic to the lower limit. I am pressing the Government for an explanation of why they chose £200 instead of £190. We have tabled a modest amendment suggesting that the lower limit should be changed from £27 to £28. On reflection, perhaps we should have gone for £29.
There is a major problem for the part-time workers who are trapped when there is a small improvement in their income—it may be only a few pence—and they have to pay national insurance contributions not based on those few pence but on the whole of their earnings. There is not sufficient recognition of the number of people who, for one reason or another, have been forced into living entirely on part-time earnings.
I shall give three examples of constituents who fall into that category. One man worked until July and was then made redundant. He had to make decisions about his future. He concluded that he was in the wrong career and that he wanted to start again and undertake a different university course. He did not find any difficulty in getting into a university. His major difficulty was obtaining a grant. However, based on his redundancy money and the possibility of finding a part-time job he thought that he could struggle through as a student by financing himself. He had major difficulties meeting his fees. He was dependent upon his own money to finance him. When he looked for a part-time evening job, he found that he was entering a whole new world. Employers were talking not about a rate for so many hours but about a rate that took into account whether he could stay below the national insurance level. He discovered that, to some employers, that was important because it simplified their bookkeeping. The employers could then say that the employee preferred to keep below the limit because it saved him having any deductions.
The man found not only that if he earned a little more he would lose money, but that it distorted the whole area of wage negotiation because it was more crucial to keep below the Government limit than to negotiate the rate for the job. The man discovered that h s interests were in conflict with the full-time workers whom he worked alongside. They would be happy to see the hourly rate raised by a few pence, because at least that would be an improvement. Yet, for him, a movement upwards meant telling his employer that he would have to work a few hours less, otherwise he would find himself above the national insurance limit.
Another constituent qualified as a teacher but could not obtain a full-time job. He was entitled to draw benefit. Instead of doing that, he visited many colleges and found a little work here and there. Eventually he built up his work to a level where he was teaching almost more hours during a week than a full-time teacher. That was two years ago. As a result of the cuts that have taken place, he found that because he was a part-time teacher he was especially vulnerable. Every time a college had to make a cut, his hours were reduced rather than those of the full-time teachers. His hours have been cut back to the point where he has to consider whether it is better not to work and to apply for benefit or to remain in work. He is another person who has been caught by the national insurance trap.


He would like to build up his work, because the more work that he obtains and the more places where he is seen, the more likely it is that he will obtain a full-time job.
My final example is of a woman who worked in the textile industry for about 20 years. She has been made redundant. She is entitled to benefit but she prefers to work. She lives on her own. She says that unless she goes out to work she does not see anyone. She does not know her neighbours, because for so many years she has gone out to work and seen little of them. She feels socially isolated. With a struggle and much persuasion, she found herself a part-time cleaning job, which brings in a fraction more than she could obtain in benefits. It is very marginal. She now finds that she has a substantial amount of stoppages because she is just over the national insurance limit. She feels that there is little or no justice in that area.
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The Government should be offering a clear explanation of how they managed to pick £200 rather than £190 out of the air. They should say whether it was based on seven times what the pension should be. They should apply that same logic to the bottom end of the scale and allow that limit to rise to at least £28, if not to £29. I do not claim that by doing that they would remove all the problems of the poverty trap, but at least they would show, with a practical action, that they were moving in the right direction. Over the years we have heard about the Government's concern, but we have seen no practical action. We do not have the figures, but no doubt the Government Front Bench will tell us what that would cost. I believe that it would be a small cost and something that they should do.

The Under-Secretary of State for Health and Social Security (Mrs. Lynda Chalker): In replying to the many points raised by Opposition Members, I shall go through them as logically as possible. We should start with amendment No. 2, moved by the hon. Member for Birmingham, Perry Barr (Mr. Rooker), which links with amendment No. 4. Of course, we understand that there will always be concern when the Government draw a line below which one does not come into a certain category but above which one comes into it. As my right hon. Friend the Secretary of State mentioned in an intervention, the effect of the poverty trap as explained in the brief by the Low Pay Unit—to which I shall return—omitted to note the duration of the family income supplement and the duration of housing benefit.
We need to put on the record not only the effect of the amendments but also why we believe that they should not be accepted. If we increased the lower earnings limit from the £27 proposed in the Bill to the £28 proposed in the amendment, we should fail to do what we are required to do by section 1(2) of the Social Security Pensions Act 1975. That Act requires the lower earnings limit to be an amount equal to, or not more than 49p less than, the basic pension rate at the beginning of the tax year in question. It is customary to set the multiple at 50p, and the tolerance of 49p in the statute was designed to permit that degree of rounding down.
As the Bill stands without the amendment, the amount of the lower earnings limit conforms to that rule. The £27 a week is the required rounded-down figure derived from the pension rate now payable for a single person of £27·15.

Mr. Buchan: Mr. Buchan rose—

Mrs. Chalker: I have not yet finished the point. Perhaps the hon. Gentleman will give me a few moments so that he may hear what I have to say. I understand that any impact on the contributions of low earners will be difficult for them. Nobody is denying that. But there is just as sudden a jump between £27·99 and £28 as there is between £26·99 and £27. I understand that the amendment was tabled for illustrative purposes in order to discuss the issue and not the exact amounts. It may also be argued that by changing the pension formula to relate it to prices movements rather than the better of earnings or prices, the Government had already effectively held down the lower earnings limit and brought more people into the contributions net.
The burden is a percentage contribution. That is why it is light where earnings are low. Although the contribution for an employee—£2.17 at £28 a week—may be a significant burden for people with such earnings, there are three things that we have to remember.
We have had several discussions about part-time and full-time earners, and I want to go into that question for a few moments. There are very few people with full-time earnings at the level concerned. They are generally part-time earners, often with other sources of family income. We know from the Department of Employment statistics that only about 0.2 per cent. of all full-time male employees earn less than £40 a week and that about 2.3 per cent. of all full-time female employees earn less than £40 a week. Therefore, there are very few working full-time for £28 a week.
It is important to remember that if we were to increase the lower earnings limit from £27, as in the Bill, to £28, as in amendment No. 2, we would reduce the accruing rights of the additional components and the guaranteed minimum pensions. Here we enter a very complicated area. I am sure that all hon. Members are well aware that very valuable benefit rights accrue from the contributions. Contributions paid on earnings at the lower earnings limits are sufficient to give full rights to all the basic benefits and pensions in the scheme. If there are any gaps in the year's record, there are credits and voluntary contributions which can rectify the deficiencies.

Mr. Rooker: If I have followed the Minister's argument correctly, she appears to be saying that the more the Government cut the old-age pension, the more the lower earnings limit will be lowered. More people will come into national insurance and, therefore, gain the benefit, at the expense of the cuts in the old-age pension, because of the break with the link with earnings. Is the Minister saying that the cut with the link with earnings is the advantage, so that old-age pensioners have a lower pension and, therefore, the other people make this gain? Is that the Minister's argument?

Mrs. Chalker: No, that is not my argument. I am sorry if what I said in some way gave rise to that thought. I was seeking to explain to the Committee that it was important that, even at low levels of earnings, these people had the opportunity, with those low levels of earnings, to be contributing. I am certain that the whole Committee would want to keep to that. It stems from the Social Security Pensions Act 1975, which sought to bring more people into earning pensions on their own account.

Mr. Buchan: Will the Minister accept that she is advancing an extraordinary argument? She is advancing the argument that the more we drop the floor, the better off will people be. Why, therefore, are we increasing it? Es it suggested that we should have it at £20, £15 or £10, in order to get all the benefits that will flow? it really will not wash.

Mrs. Chalker: What I was saying was not that we would drop the limits but that there are benefits that accrue for the people who come into the area of paying contributions. It has been widely accepted throughout the House of Commons and throughout the pensions industry that contributing towards a pension for one's old age is a good thing to do. If we wanted to raise the lower limit at which we began the process, the size of the contribution paid by those above that limit would be even harsher, and the effect of the poverty trap at that higher rate would be very much more abrupt.
With regard to the whole question of part-time earnings, on which a number of hon. Members commented, we estimate that there are about 200,000 persons with part-time earnings between the lower earnings limit of £27 proposed in the Bill and the £28 proposed in the amendment. The census of employment for June 1977 shows that about 40 per cent. of part-time workers are earning less than £28.
The important aspect, to which I referred earlier, is that those who are on low pay and who work for 30 hours a week—or, if they are single parents, for 24 hours a week—are entitled, if they have children, to family income supplement. That continues for 52 weeks and the housing benefits continue for £26 weeks, irrespective of any change in circumstances, whether it be brought about by a change in the lower earnings limit or by some other change in circumstances concerning taxation.

Mr. Ralph Howell: What is the logic behind one benefit continuing for 52 weeks and the other benefit continuing for 26 weeks?

Mrs. Chalker: Certainly, it is not—as the hon. Member for Birkenhead (Mr. Field) said from a sedentary position—in order to confuse. When the family income supplement was brought in in 1971, it was to try to help the families who were on low lay to increase their income and to help them over a continuing period of time. The housing benefits, as hon. Members will know, are not administered by my Department and are largely administered by local authorities. But, quite separate from anything that is before us tonight, there is the review of housing benefits. I shall note my hon. Friend's comment when we come to that review. In order that my hon. Friend should not be further confused, I felt that I should clarify the point as quickly as possible I do not intend to elaborate it any further.
Some of the other comments made during the debate have concerned not simply the full-time and part-time earnings but the problems that obviously accrue for far lilies who are on low incomes. While it would be very easy to accept the arguments put forward by the hon. Member for Birkenhead, I do not believe that we shall resolve any of the problems that face us in this matter if we do away with the upper limit, to which I shall return when dealing with amendment No. 3, tabled by the hon. Member for Stockport, North (Mr. Bennett).
The problem that the Opposition face when they suggest that there should be any change in the lower earnings limit is that they are seeking to move away from a formula that we have always hoped would stand the test of time. It is a formula that was painfully arrived at during the passage of the Social Security Pensions Bill in 1975. The formula included a lower earnings limit, which would be effective for the payment of contributions. The £28, as the hon. Member for Stockport, North said, might be justified if we were to look at the earnings movement, but there are now other considerations that quite genuinely outweigh this point. We have particularly the need to preserve the basic benefits for the lower-paid.
My hon. Friend the Member for Somerset, North (Mr. Dean) asked about the financial effect of the amendment. The effect would be to reduce income by £9 million in respect of those employees earning between £27 and £28 but to increase income by £31 million by reducing the range over which the contracted-out contributions—of both employers and employees — benefit from contribution abatement. In other words, the amendment would result in a net increase.
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Both this Government and the Labour Government have kept to the formula because they wished to ensure that the lower earnings limit was linked to the level of pensions. As a result, those in employment whose earnings exceed the lower earnings limit contribute towards these basic benefits.

Mr. Rooker: Mr. Rooker rose—

Mrs. Chalker: It might be better for me to finish my remarks first. It is important that contributions should be sufficient to support the benefit for which they provide cover. That is why the direct link between the contributions earnings limits and the pension rates remains an important criterion. The most important thing is to protect benefit rights for the future.
As the hon. Member for Perry Barr said, amendment No. 4 is a paving amendment for amendment No. 2. Its effect would be to bring the £28 within the limits required by the Act. The Government believe that the link between the basic pension limit and the lower earnings limit should be maintained, but we do not want to lose the start of class 1 insurance cover. Some people would lose that if the Act were amended.
I turn to the questions raised by the hon. Member for Birkenhead. Why cannot we do away with the upper earnings limit? That question is also relevant to the amendment tabled by the hon. Member for Stockport, North. We all accept that pensions—

Mr. Rooker: On a point of order, Mr. Weatherill. We want to be co-operative, but we do not want to lose the opportunity that you granted us—namely, to debate the removal of the upper limit. My hon. Friend the Member for Stockport, North (Mr. Bennett) spoke not on the removal of the upper limit but on the issue of £190. If the Minister carries on in the way that she has begun, I fear that we shall be deprived of our opportunity to speak in the clause stand part debate.

The Chairman: I said that I would allow a debate on clause stand part. That debate should be fairly brief, because many amendments have been tabled on clause 1. However, that guarantee still stands.

Mrs. Chalker: If the hon. Member for Perry Barr so wishes, I shall leave those remarks until later. The House has never agreed that pensions should be unlimited for those who have earned high wages throughout their working lives. Therefore, there must be an upper earnings limit for pension purposes. Contributions above that limit will give no entitlement to benefit. They will be a straight subvention from the national insurance fund. Given the remarks made by the hon. Member for Perry Barr and the wish to discuss the matter in the debate on clause stand part, I shall not go into further detail.
Those of us who have sat on Committees that have discussed social security Bills are used to hearing ingenious explanations for raising certain issues from the hon. Member for Stockport, North. Over the years we have got used to that. However, I assure the hon. Gentleman that his explanation today had nothing to do with the decision about the upper earnings limit.
The amendment tabled by the hon. Member for Stockport, North seeks to change the upper earnings limit proposed for class 1 contributions from £200 a week to £190 a week. Section 1(3) of the Social Security Pensions Act requires that the upper earnings limit should be between six and a half and seven and a half times the basic pension rate, or between £176·48 and £203·63. In practice, the upper earnings limit has long been a multiple of £5, for ease of calculation.
In 1980–81 the upper earnings limit was 7·08 times the pension rate. The proposal put forward by the hon. Member for Stockport, North would reduce that multiple to just under 7, at a time when income to the fund needs to be bolstered in order to match outgo. Cmnd. 8091, the report of the Government Actuary on the financial provisions of the Bill, shows that the total outgo for 1981–82 of £17,842 million is much higher than that of previous years. The amount goes up every year at a fast rate.
On Second Reading, it was accepted that income should be kept in line with outgo. Even with the upper earnings limit of £200, the surplus expected in 1981–82 is under £40 million. Indeed, it is about £39 million. If there were an upper earnings limit of £190, there would be a deficit of £64 million on the estimated outgo according to the Government Actuary's report. The £200 mentioned in the Bill is 7·37 times the pension rate. In other words, it is well within the range of six and a half to seven and a half times the pension rate in the Social Security Pensions Act. If we were to accept the hon. Member's amendment, the House would have to make up the deficit that would accrue for 1981–82 in some other way.

Mr. Andrew F. Bennett: What will the deficit be?

Mrs. Chalker: I have already told the hon. Gentleman that if the upper earnings limit were set at £190 the deficit on the fund would be £64 million, according to the calculations that the Government Actuary has used.
The £200 limit avoids the need for a further rate increase. It makes the impact of the contribution burden a little more progressive. It is important that the national insurance fund should be kept in balance, as far as that is possible. If we were to create a deficit purposely and knowingly, we should be wrong.
Many comments have been made on this group of amendments. A rise in rates for national insurance contributions will never be welcomed. We have sought to

keep within the terms of the Act that was agreed, after a great deal of discussion, by the late Brian O'Malley and other colleagues of mine in 1975. Not only was agreement reached between parties in the House and in the other place but also, for the first time in many years, agreement was reached between those in the occupational fields who have about 11 million contributors and those who run the national insurance pension fund. To break such an agreement would be a truly retrograde step.
For those reasons, I believe that we must keep to the formula of the lower earnings limit for the single person's basic pension, that we ensure that the national insurance fund is kept in balance and that we do not go down a path that would lead it directly into deficit.

Mr. Norman Buchan: I hope to say more later, but it might be useful, as I am at the Opposition Dispatch Box for the first time, as it were, to make some comments.
I was surprised at some of the points made by the Minister in justification of these proposals relating to the lower-paid. I find extraordinary the suggestion that whereas, hitherto, we were told that we were keeping out the low-paid in order to save them money, we are now told that if we push up the figure to £28 we shall cause them to suffer. That seems to be a contradiction of the concept that we should leave the figure at £27 in order to assist and not to bring hardship. All who have discussed this proposal have said that the £27 level will increase the hardship on those who are already in the poverty trap. The excuse for choosing this figure is that the 3 million people on the £27 to £29 level are on part-time earnings and are in receipt of family assistance of one kind or another.
I also find extraordinary the argument that the figure could not be moved up to £28 because the parent Act would not have permitted it. But the Opposition, despite all the difficulties that have been imposed upon them in dealing with amendments, have put forward a way of doing that successfully by introducing amendment No. 4 as a paving amendment.
Much of the argument that we have heard has had little to do with the concept of the consensus on national insurance that the Minister has been defending, including using the name of Brian O'Malley. The consensus has been rapidly smashed by the Government. One aspect of the smashing is the heavy reduction in the taxation element—the shift from 18 per cent. down to 14½ per cent. that is envisaged. That is beginning to shift away from the consensus. We do not accept that there is justification for this proposal on the basis of previous Acts introduced largely by the Labour Party, usually with support from the Conservative Party, based mainly on the work of Brian O'Malley.
This is not so much a national insurance measure as a tax measure. The Sunday Times reports:
As forecasts of the government's borrowing requirement mount higher, ministers are discussing possible increases in taxation. It would be against the government's principles to raise income tax, and its obsession with inflation figures makes it reluctant to increase indirect taxes. So it is now looking at the employees' national insurance contributions as a way of raising more revenue.
The proposals set out in this clause, but more so in the following clauses, relate to tax and not to national insurance. That is one reason why we feel angry about this measure.
Will the £27 cause hardship? Of course it will. Much has been made of the material brought forward by the Low


Pay Unit. I have not heard anyone so far reject the arguments of the Low Pay Unit. It argues that the problem will be compounded for the 90,000 low-paid workers already caught in the poverty trap. It says that the effective marginal tax rate is about 100 per cent. It points out that
a married man with two young children will have a total disposable income of around £63 per week whether his weekly wage is actually £39 or £79.
The whole argument is based on those who are caught in the poverty trap, and that should be crucial for the Government because they claim that they were elected to provide incentives. I cannot think of anything that will provide a greater disincentive than the £27, because the amount to be charged on that figure is based not on the last pound but on the total amount. Therefore, the Government are contradicting their own claim to try to achieve the non-workshy society.
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The balance has now been shifted, but it has not been shifted justly. One of the arguments for the £27 is that whereas on the upper limit—the ceiling—there has been a shift of about 22 per cent., the bottom level has been raised by only 17 per cent.

Mr. Reg Race: Will my hon. Friend also comment on the Government's proposal to index the higher-rate tax bands? That is part of the equation, is it not? The difference between the lower-paid and the higher-paid is not only the level of national insurance contributions that they have to pay but the tax benefits that trey are are given.

Mr. Buchan: We are accusing the Government not of having no pattern in their thinking but of having a pattern of that kind in their thinking.
I turn now to the £190 figure, I hope that my hon. Friend the Member for Stockport, North (Mr. Bennett) treats this as a probing amendment rather than an amendment on which we would necessarily wish to vote. I do not think that he has received a satisfactory answer. We had hoped that there would be closer financial involvement in his multiplication by seven, because that would have aided us with the other amendments. We have not yet been given a clear explanation. It is clear that there was no mathematical thinking in the Government's mind.
Approximately 3 million part-time workers will be c aught in the trap between £27 and £29. We have proposed these amendments because we see injustice developing further between higher-paid and lower-paid workers. Each shift by the Treasury towards contributions will result in a direct and highly regressive tax.
I hope that we receive support and even a shift of mind by the Government, particularly on the lower level of £27.

Mr. Frank Dobson: I rise with some trepidation to speak on social security, because I do not share the expertise of most Opposition Members. I do not subscribe to Orwell's view that "Ignorance is Strength". I hope that the simplicity of my understanding on one aspect of clause 1 will make more impact on the Secretary of State than the more learned and expert arguments that hate been adduced by my colleagues.
Everyone—even the Secretary of State—accepts that this is a regressive measure. The amendment, which refers to raising the lower limit from £27 to £28, is at the heart of the most regressive aspect of this regressive Bill.
I draw the attention of the Secretary of State to the manifesto on which he and his colleagues fought the general election. On page 13—which was unlucky for some—it states:
We shall cut income tax at all levels to reward hard work, responsibility and success; tackle the poverty trap"—
we are discussing the poverty trap—
encourage saving and the wider ownership of property; simplify taxes…and reduce tax bureaucracy.
It goes on:
It is especially important to cut the absurdly high marginal rates of tax both at the bottom and top of the income scale.
We are here dealing with an even more absurdly high marginal rate of tax at the bottom of the income scale. The election manifesto goes on to say:
It must pay a man or a woman significantly more to be in, rather than out of, work. Raising tax thresholds will let the low-paid out of the tax net altogether.
This is a lowering of the threshold. It is also a form of tax, so it is contrary to that undertaking. The manifesto goes on:
unemployment and short-term sickness benefit must be brought into the computation of actual income.
That was on taxation. I turn to what the manifesto says about social security. This aspect may explain why the Chancellor got himself and the House so confused when he introduced his mini-Budget. The manifesto says:
Our social security system is now so complicated that even some ministry officials do not understand it.
It appears that several Members, at least, of the Treasury Bench did not understand it, and probably do not understand it any more now. The manifesto also says:
Income tax starts at such a low level that many poor people are being taxed to pay for their own benefits.
This is exactly that kind of tax, and because it is more regressive than income tax it taxes those at the lower end of the scale more heavily even than if this bit of revenue had been raised from income tax.
I therefore strongly support the amendment to increase the minimum level from £27 to £28 because of that crucial, regressive aspect of this part of the existing legislation. I think that we all recognise that it has that impact, whatever the levels may be. There is, nevertheless, merit in raising the level, because this is not like income tax. When one moves from one income tax bracket to another, one pays the enhanced rate only on the income covered by the higher bracket. One does not have to pay the higher rate on all the income that one receives. In this case, as I understand it in my simple way, when people who previously made no contributions go over this benchmark, they must immediately start paying 7·7 per cent. not just on the income above the benchmark but on the whole of their income.
This must be the most regressive aspect of anything in our taxation and social security system. The amendment is an admirable effort to alleviate to some extent the consequences of this general provision. I therefore strongly support it. As I have said, I hope that my simplicity and relative ignorance in this matter may have helped to convince the Secretary of State in a way that the expertise of my colleagues has not.

Mr. Andrew F. Bennett: I am very puzzled by the Minister's reply, the whole thrust of which seemed to be that she was doing people a good turn by keeping the limit that bit lower, because she was ensuring that people paid for benefits. If that is her argument, she must be certain


that for all part-time workers there are definite benefits to accrue from payments. Some people are unlikely to receive any benefit. It is a very difficult area.
There are people who, if they do not pay contributions for only short periods in the course of a lifetime, lose very little, if anything of their pension. It is, therefore, dangerous to tell people now struggling to work their way through college or university by working part-time that it is in their own interests to pay contributions. For most of them, that small amount of money is far more crucial now than it is ever likely to be for their pension, as they will almost certainly be entitled to a full pension on the rest of their earnings record over the years.
The only possible area in which those people might lose benefit is in regard to sickness benefit, but if the Minister really believes her own argument she should be saying that all people who are working and are below the £27 threshold should have the opportunity to make a contribution, taking into account their ability to pay, so that they may get benefits. She should be putting forward a graduated system of payments in order to give everyone that form of benefit, rather than have this cut-off point.

Mr. Race: I think that my hon. Friend said that the only benefit that people might actually lose was either retirement pension or sickness benefit. Is he aware that many part-time workers, some of whom earn just over £27, are ineligible to register as unemployed part-time workers and, therefore, receive no national insurance unemployment benefit? Many employment exchanges will only register people, particularly women, for full-time work. That invalidates the argument that only sickness benefit and pensions are affected by this miserable proposal.

Mr. Bennett: I accept that. I am suggesting that if the Minister is really concerned about the group that is losing as a result of the higher rate she should bring forward proposals so that some of those people can qualify for benefit and make a small payment, but not the penal tax contained in this proposal.
With regard to the upper limit, we still have not had a proper explanation of the figure. All that it really amounts to is that the Government were looking for any extra money that they could find, and that is why they raised the limit. There was no logic in it at all.
The Minister went on to say that it all came back to the supposed deal in relation to the Social Security Pensions Act. There is great concern among the Opposition as to what that deal actually was and what record there is of it. As I understand it, the Social Security Pensions Act provided that pensions would be linked with prices and earnings, and that they would be raised in line with whichever went up the most. If that was the deal, it was broken last year, when the Government took away the link with earnings, because that is the important aspect. If the Government wish to rest their case upon that, they must start moving these things in line with earnings and not merely in line with prices.
The Minister must give the Committee a clear explanation. Was the deal based only on the link with pensions, irrespective of how they went up, or was the link with pensions based on the fact that they would go up with the best of both worlds—prices or earnings? That is my understanding of the deal. It is unfair of the Minister to

claim that a deal reached in the past, based upon those principles, still holds when one of the fundamental principles has been withdrawn.

Mr. Rooker: I may be wrong. I heard the Secretary of State muttering while my hon. Friend was making his point. I invite my hon. Friend to put the question directly, because I do not know what Ministers actually mean when they talk about the deal. Do they mean the consensus, the bipartisan agreement—the Social Security Pensions Act 1975 or the Social Security Act 1975, one or other, or both? That is the nub of the matter. The earnings link is in the Social Security Act, but the earnings limits are in the Social Security Pensions Act. We must know to which Act Ministers are referring, so that we know which pledge they are breaking.

Mr. Bennett: I thank my hon. Friend for that intervention. I see no point in my repeating the question. I hope that the Minister will answer it and tell us on what basis the deal existed. If she is claiming that it existed merely on the basis of prices, most Labour Members would not accept that.
If the argument is to rest on the link with earnings, the Government at least ought to accept the increase from £27 to £28. On that basis, I would have thought that the £200, rather than being the top point, could be the mid-point in a range between, say, £185 and £210. I believe that the Committee could accept such figures.
We must be told the basis on which the deal was made. Was it based on one of those Acts, or on a combination of them? In my view, it would be acceptable only if it were done on the basis of earnings as well as prices.

Mrs. Chalker: I come back to what I have said already. I am sorry that the hon. Member for Stockport, North (Mr. Bennett) did not grasp the point that I made about the upper earnings limit being changed in line with his amendment. I was pointing out that this would cause a deficit on the national insurance fund of about £64 million. In changing contributions limits, the previous Government, long before this Government, always sought to keep the fund in balance. The amendment would not permit that to happen. That is the advice of the Government Actuary's Department, and that is the reason why we are unable to accept the amendment. We have a duty to keep the fund in balance.
Both the hon. Member for Stockport, North and the hon. Member for Holborn and St. Pancras, South (Mr. Dobson) made an interesting case. I shall want to go into it in some detail afterwards, but I do not think that it was tied directly to what was said earlier in the debate. I shall consider what the hon. Members said and see whether there is any information that I can give them directly by letter.
I should like to reply to the point raised by the hon. Members for Birmingham, Perry Barr (Mr. Rooker) and for Stockport, North. When I referred to the earnings limit, I spoke of the Social Security Pensions Act 1975. As the hon. Member for Perry Barr said, it is in that Act that the upper and lower earnings limits are defined, as well as their relationship to pensions. For those who were not in the House at the time of that legislation, I should point out that the deal was to enable contracting out by companies that wished to have a company pension scheme that


worked alongside the State pension scheme. That was brought into being from April 1978 by the Social Security pensions Act 1975. There has been no change in that deal. The upper and lower earnings limits are set out there for very good reasons, as I have sought to point out. I believe that we are right to maintain the formula that was agreed in that Act, thus ensuring that the contributions of those who earn eventually provide benefit.
One Labour Member spoke of the regressive nature of national insurance contractions. I accept that the argument can be played that way, but I believe that most people in the country realise that it is net income on which most families judge their standard of living. On that basis, one must accept that national insurance contributions are mildly progressive up to the upper earnings limit, and that that contains the vast majority of families.
We could engage in long discussions on this issue. However, the principle that was established by both parties in 1975, in the measure that went through the House speedily and with no difficulty whatever, has now been used as a vehicle. We understand the tactic, but we cannot accept the case that has been put forward by the Opposition.

Mr. Rooker: I should like to make one point so that it is clear and on the record. We do not accept the Minister's, arguments. We sincerely believe that the agreements entered into in tie past have been broken by the Government's decision earlier this year to break the link between the old-age pension and earnings or prices, whichever is the higher. Our argument has hung on that point. We stick by it. We do not accept the Government's arguments, and we shall vote for the amendment.

Question put, That the amendment be made:—

The Committee divided: Ayes 226, Noes 284.

Division No. 17]
[6.35 pm


AYES


Abse, Leo
Cowans, Harry


Adams, Allen
Cox, T. (W'dsw'th, Toot'g)


Allaun, Frank
Crowther, J. S.


Anderson, Donald
Cryer, Bob


Ashton, Joe
Cunliffe, Lawrence


Atkinson, N.(H'gey,)
Cunningham, G. (Islington S)


Bagier, Gordon A.T.
Dalyell, Tam


Barnett, Guy (Greenwich)
Davidson, Arthur


Barnett, Rt Hon Joel (H'wd)
Davies, Rt Hon Denzil (L'lli)


Beith, A. J.
Davis, Clinton (Hackney C)


Bennett, Andrew(St'kp't N)
Davis, T. (B'ham, Stechf'd)


Bidwell, Sydney
Deakins, Eric


Booth, Rt Hon Albert
Dean, Joseph (Leeds West)


Boothroyd, Miss Betty
Dempsey, James


Bottomley, Rt Hon A.(M'b'ro)
Dewar, Donald


Bray, Dr Jeremy
Dobson, Frank


Brown, Hugh D. (Provan)
Dormand, Jack


Brown, R. C. (N'castle W)
Douglas, Dick


Brown, Ron (E'burgh, Leith)
Douglas-Mann, Bruce


Buchan, Norman
Dubs, Alfred


Callaghan, Rt Hon J.
Duffy, A. E. P.


Callaghan, Jim (Midd't'n &amp; P)
Dunn, James A.


Campbell, Ian
Dunnett, Jack


Campbell-Savours, Dale
Dunwoody, Hon Mrs G.


Canavan, Dennis
Eadie, Alex


Cant, R. B.
Eastham, Ken


Carmichael, Neil
Edwards, R. (W'hampt'n S E)


Carter-Jones, Lewis
Ellis, R. (NE D'bysh're)


Cartwright, John
Ellis, Tom (Wrexham)


Clark, Dr David (S Shields)
English, Michael


Cocks, Rt Hon M. (B'stol S)
Ennals, Rt Hon David


Cohen, Stanley
Evans, Ioan (Aberdare)


Coleman, Donald
Evans, John (Newton)


Conlan, Bernard
Ewing, Harry


Cook, Robin F.
Faulds, Andrew





Field, Frank
Morris, Rt Hon A. (W'shawe)


Fitch, Alan
Morris, Rt Hon C. (O'shaw)


Fitt, Gerard
Morris, Rt Hon J. (Aberavon)


Fletcher, Raymond (Ilkeston)
Moyle, Rt Hon Roland


Fletcher, Ted (Darlington)
Mulley, Rt Hon Frederick


Foot, Rt Hon Michael
Newens, Stanley


Ford, Ben
Oakes, Rt Hon Gordon


Forrester, John
Ogden, Eric


Foulkes, George
O'Halloran, Michael


Fraser, J. (Lamb'th, N'w'd)
O'Neill, Martin


Freeson, Rt Hon Reginald
Owen, Rt Hon Dr David


Garrett, John (Norwich S)
Palmer, Arthur


Garrett, W. E. (Wallsend)
Park, George


George, Bruce
Parker, John


Gilbert, Rt Hon Dr John
Pavitt, Laurie


Ginsburg, David
Powell, Raymond (Ogmore)


Golding, John
Price, C. (Lewisham W)


Gourlay, Harry
Race, Reg


Grant, John (Islington C)
Radice, Giles


Grimond, Rt Hon J.
Rees, Rt Hon M (Leeds S)


Hamilton, James (Bothwell)
Richardson, Jo


Hamilton, W. W. (C'tral Fife)
Roberts, Allan (Bootle)


Hardy, Peter
Roberts, Ernest (Hackney N)


Harrison, Rt Hon Walter
Roberts, Gwilym (Cannock)


Hattersley, Rt Hon Roy
Robertson, George


Haynes, Frank
Robinson, G. (Coventry NW)


Healey, Rt Hon Denis
Rodgers, Rt Hon William


Heffer, Eric S.
Rooker, J. W.


Hogg, N. (E Dunb't'nshire)
Roper, John


Holland, S. (L'b'th, Vauxh'll)
Ross, Ernest (Dundee West)


Home Robertson, John
Rowlands, Ted


Homewood, William
Ryman, John


Hooley, Frank
Sandelson, Neville


Horam, John
Sever, John


Howell, Rt Hon D.
Sheerman, Barry


Howells, Geraint
Sheldon, Rt Hon R.


Huckfield, Les
Shore, Rt Hon Peter


Hudson Davies, Gwilym E.
Silkin, Rt Hon J. (Deptford)


Hughes, Mark (Durham)
Silverman, Julius


Hughes, Robert (Aberdeen N)
Snape, Peter


Hughes, Roy (Newport)
Soley, Clive


Janner, Hon Greville
Spearing, Nigel


Jay, Rt Hon Douglas
Spriggs, Leslie


John, Brynmor
Stallard, A. W.


Johnson, James (Hull West)
Steel, Rt Hon David


Johnson, Walter (Derby S)
Stewart, Rt Hon D. (W Isles)


Johnston, Russell (Inverness)
Stoddart, David


Jones, Rt Hon Alec (Rh'dda)
Straw, Jack


Jones, Barry (East Flint)
Summerskill, Hon Dr Shirley


Jones, Dan (Burnley)
Taylor, Mrs Ann (Bolton W)


Kaufman, Rt Hon Gerald
Thomas, Jeffrey (Abertillery)


Kerr, Russell
Thomas, Mike (Newcastle E)


Lambie, David
Thomas, Dr R.(Carmarthen)


Leadbitter, Ted
Tilley, John


Leighton, Ronald
Torney, Tom


Lewis, Arthur (N'ham NW)
Varley, Rt Hon Eric G.


Lewis, Ron (Carlisle)
Wainwright, E.(Dearne V)


Litherland, Robert
Wainwright, R.(Colne V)


Lofthouse, Geoffrey
Walker, Rt Hon H.(D'caster)


Lyon, Alexander (York)
Watkins, David


Lyons, Edward (Bradf'd W)
Welsh, Michael


McCartney, Hugh
White, Frank R.


McDonald, Dr Oonagh
White, J. (G'gow Pollok)


McGuire, Michael (Ince)
Whitehead, Phillip


McKay, Allen (Penistone)
Whitlock, William


McKelvey, William
Wigley, Dafydd


MacKenzie, Rt Hon Gregor
Willey, Rt Hon Frederick


Maclennan, Robert
Williams, Rt Hon A.(S'sea W)


McTaggart, Robert
Wilson, Gordon (Dundee E)


Marks, Kenneth
Wilson, Rt Hon Sir H.(H'ton)


Marshall, Dr Edmund (Goole)
Wilson, William (C'try SE)


Marshall, Jim (Leicester S)
Winnick, David


Martin, M(G'gow S'burn)
Woodall, Alec


Mason, Rt Hon Roy
Woolmer, Kenneth


Meacher, Michael
Wrigglesworth, Ian


Mikardo, Ian
Young, David (Bolton E)


Millan, Rt Hon Bruce



Miller, Dr M. S. (E Kilbride)
Tellers for the Ayes:


Mitchell, Austin (Grimsby)
Mr. George Morton and


Mitchell, R. C. (Soton Itchen)
Mr. James Tinn.






NOES


Adley, Robert
Fenner, Mrs Peggy


Aitken, Jonathan
Fisher, Sir Nigel


Alexander, Richard
Fletcher, A. (Ed'nb'gh N)


Ancram, Michael
Fookes, Miss Janet


Arnold, Tom
Forman, Nigel


Aspinwall, Jack
Fraser, Peter (South Angus)


Atkins, Robert(Preston N)
Fry, Peter


Atkinson, David (B'm'th,E)
Galbraith, Hon T. G. D.


Baker, Kenneth (St.M'bone)
Gardiner, George (Reigate)


Baker, Nicholas (N Dorset)
Gardner, Edward (S Fylde)


Banks, Robert
Garel-Jones, Tristan


Beaumont-Dark, Anthony
Gilmour, Rt Hon Sir Ian


Bell, Sir Ronald
Glyn, Dr Alan


Bendall, Vivian
Goodhew, Victor


Benyon, Thomas (A'don)
Goodlad, Alastair


Best, Keith
Gorst, John


Bevan, David Gilroy
Gower, Sir Raymond


Biffen, Rt Hon John
Grant, Anthony (Harrow C)


Biggs-Davison, John
Gray, Hamish


Blackburn, John
Greenway, Harry


Blaker, Peter
Grieve, Percy


Body, Richard
Griffiths, E.(B'y St. Edm'ds)


Bonsor, Sir Nicholas
Griffiths, Peter Portsm'th N)


Boscawen, Hon Robert
Grylls, Michael


Bottomley, Peter (W'wich W)
Gummer, John Selwyn


Bowden, Andrew
Hamilton, Hon A.


Boyson, Dr Rhodes
Hamilton, Michael (Salisbury)


Bright, Graham
Hampson, Dr Keith


Brinton, Tim
Hannam, John


Brittan, Leon
Haselhurst, Alan


Brocklebank-Fowler, C.
Hastings, Stephen


Brooke, Hon Peter
Havers, Rt Hon Sir Michael


Brotherton, Michael
Hawkins, Paul


Brown, M.(Brigg and Scun)
Hawksley, Warren


Browne, John (Winchester)
Hayhoe, Barney


Bruce-Gardyne, John
Heath, Rt Hon Edward


Bryan, Sir Paul
Heddle, John


Buchanan-Smith, Hon Alick
Henderson, Barry


Buck, Antony
Heseltine, Rt Hon Michael


Budgen, Nick
Hicks, Robert


Burden, Sir Frederick
Higgins, Rt Hon Terence L.


Butcher, John
Hill, James


Butler, Hon Adam
Holland, Philip (Carlton)


Cadbury, Jocelyn
Hooson, Tom


Carlisle, John (Luton West)
Hordern, Peter


Carlisle, Kenneth (Lincoln)
Howe, Rt Hon Sir Geoffrey


Carlisle, Rt Hon M. (R'c'n)
Howell, Ralph (N Norfolk)


Chalker, Mrs. Lynda
Hunt, David (Wirral)


Chapman, Sydney
Hunt, John (Ravensbourne)


Churchill, W. S.
Hurd, Hon Douglas


Clark, Hon A. (Plym'th, S'n)
Irving, Charles (Cheltenham)


Clarke, Kenneth (Rushcliffe)
Jenkin, Rt Hon Patrick


Clegg, Sir Walter
Jessel, Toby


Cockeram, Eric
Johnson Smith, Geoffrey


Colvin, Michael
Jopling, Rt Hon Michael


Cope, John
Kellett-Bowman, Mrs Elaine


Cormack, Patrick
Kershaw, Anthony


Corrie, John
Kimball, Marcus


Costain, Sir Albert
King, Rt Hon Tom


Cranborne, Viscount
Kitson, Sir Timothy


Critchley, Julian
Knight, Mrs Jill


Crouch, David
Knox, David


Dean, Paul (North Somerset)
Lamont, Norman


Dickens, Geoffrey
Lang, Ian


Dorrell, Stephen
Langford-Holt, Sir John


Douglas-Hamilton, Lord J.
Latham, Michael


du Cann, Rt Hon Edward
Lawson, Nigel


Dunn, Robert (Dartford)
Lee, John


Durant, Tony
Lennox-Boyd, Hon Mark


Dykes, Hugh
Lester Jim (Beeston)


Eden, Rt Hon Sir John
Lloyd, Peter (Fareham)


Eggar, Tim
Loveridge, John


Elliott, Sir William
Luce, Richard


Emery, Peter
Lyell, Nicholas


Eyre, Reginald
McCrindle, Robert


Fairbairn, Nicholas
Macfarlane, Neil


Faith, Mrs Sheila
MacGregor, John


Farr, John
MacKay, John (Argyll)


Fell, Anthony
Macmillan, Rt Hon M.





McNair-Wilson, M. (N'bury)
Shaw, Giles (Pudsey)


McNair-Wilson, P. (New F'st)
Shaw, Michael (Scarborough)


McQuarrie, Albert
Shelton, William (Streatham)


Madel, David
Shepherd, Colin (Hereford)


Major, John
Shepherd, Richard


Marland, Paul
Shersby, Michael


Marlow, Tony
Silvester, Fred


Marshall Michael (Arundel)
Sims, Roger


Marten, Neil (Banbury)
Skeet, T. H. H.


Mather, Carol
Smith, Dudley


Maude, Rt Hon Angus
Speller, Tony


Mawby, Ray
Spicer, Jim (West Dorset)


Mawhinney, Dr Brian
Spicer, Michael (S Worcs)


Maxwell-Hyslop, Robin
Sproat, Ian


Mayhew, Patrick
Squire, Robin


Meyer, Sir Anthony
Stainton, Keith


Miller, Hal (B'grove)
Stanbrook, Ivor


Mills, Iain (Meriden)
Stanley, John


Mills, Peter (West Devon)
Steen, Anthony


Mitchell, David (Basingstoke)
Stevens, Martin


Moate, Roger
Stewart, Ian (Hitchin)


Monro, Hector
Stewart, J.(E Renfrewshire)


Montgomery, Fergus
Stradling Thomas, J.


Moore, John
Tapsell, Peter


Morris, M. (N'hampton S)
Taylor, Robert (Croydon NW)


Morrison, Hon C. (Devizes)
Taylor, Teddy (S'end E)


Morrison, Hon P. (Chester)
Tebbit, Norman


Myles, David
Temple-Morris, Peter


Neale, Gerrard
Thomas, Rt Hon Peter


Needham, Richard
Thompson, Donald


Nelson, Anthony
Thornton, Malcolm


Neubert, Michael
Townend, John (Bridlington)


Newton, Tony
Townsend, Cyril D, (B'heath)


Normanton, Tom
Trippier, David


Nott, Rt Hon John
Trotter, Neville


Onslow, Cranley
van Straubenzee, W. R.


Oppenheim, Rt Hon Mrs S.
Vaughan, Dr Gerard


Osborn, John
Viggers, Peter


Page, Rt Hon Sir G. (Crosby)
Waddington, David


Page, Richard (SW Herts)
Wakeham, John


Parkinson, Cecil
Waldegrave, Hon William


Parris, Matthew
Walker, B. (Perth )


Patten, Christopher (Bath)
Walker-Smith, Rt Hon Sir D.


Pattie, Geoffrey
Wall, Patrick


Pawsey, James
Waller, Gary


Peyton, Rt Hon John
Walters, Dennis


Pink, R. Bonner
Ward, John


Pollock, Alexander
Warren, Kenneth


Porter, Barry
Watson, John


Price, Sir David (Eastleigh)
Wells, John (Maidstone)


Proctor, K. Harvey
Wells, Bowen


Pym, Rt Hon Francis
Wheeler, John


Raison, Timothy
Whitelaw, Rt Hon William


Rathbone, Tim
Whitney, Raymond


Rees, Peter (Dover and Deal)
Wickenden, Keith


Rees-Davies, W. R.
Wiggin, Jerry


Renton, Tim
Wilkinson, John


Ridley, Hon Nicholas
Winterton, Nicholas


Ridsdale, Julian
Wolfson, Mark


Rifkind, Malcolm
Young, Sir George (Acton)


Rost, Peter
Younger, Rt Hon George


Royle, Sir Anthony



Sainsbury, Hon Timothy
Tellers for the Noes:


St. John-Stevas, Rt Hon N.
Mr. Spencer Le Marchant


Scott, Nicholas
and Mr. Anthony Berry.

Question accordingly negatived.

Mr. Rooker: I beg to move amendment No. 5, in page 1, line 13, leave out subsection (2).

The First Deputy Chairman (Mr. Bryant Godman Irvine): With this we may take the following amendments:

No. 6, in page 1, line 15, leave out '"7·75 per cent."' and insert

'"6·75 per cent. up to an earnings limit of £85 per week and thereafter 7·75 per cent.".

No. 7, in page 1, line 15, leave out '7·75 per cent.' and insert '7·25 per cent.'.

No. 8, in page 1, line 15, leave out '7·75 per cent.' and insert '7 per cent.'.

No. 9, in page 1, line 15, at end insert
'(2A) In section 4(6)(b) of the principal Act (amount of secondary Class 1 contributions) for the words "10·2 per cent." there shall be substituted "10·7 per cent.".'.

Mr. Rooker: The doors are not closed, Mr. Godman Irvine. This is a debating Chamber, and I should have hoped that both doors could be closed before we commenced the debate. [Interruption.] Does the Secretary of State wish to say something?
It is not without accident that only one Conservative Member, the hon. Member for Somerset, North (Mr. Dean), took part in the debate on amendment No. 2. I hope hat a few more Tory Members will seek to participate in this debate, if only because of the large sum of money involved accept that only a small sum was involved in the previous group of amendments—£9 million or £22 million net to the national insurance fund—but amendment No. 5 is in some ways the meat of the Bill. The Government are seeking to raise £1 billion by an impost of 1 per cent. on the national insurance contributions paid by employees.
The Treasury notice issued last month, which was Landed out to selected journalists, broke down the figure. We are talking about £947 million raised from employees, but in the notes at the bottom of the notice it is indicated that a further £50 million has to be added. That will come basically from the self-employed and those who pay voluntary contributions. There is a later amendment on the self-employed. I had not realised on Second Reading that there was an impost on the self-employed. We are talking about a total of £997 million.

Mr. Patrick Jenkin: So that there should be no misunderstanding, I should point out that the £997 million, includes the £50 million, as the note says, added far c lasses 2, 3 and 4 contributions. It is the £50 million added to the £947 million that appears in the first column of the Treasury note.

Mr. Rooker: I thought that that was what I had said. I said £947 million at first, and I realised afterwards that there was an extra £50 million, in the note to the note. The grand total is £997 million, which includes the £50 million it impost on the self-employed. It is £1 billion, and that is a lot of money in anyone's language. I understand from a written reply that it is the equivalent of 1¼p on income tax.
An increase in income tax would be a fairer way of raising the money, because the well-off who earn more than £200 a week would pay extra, but they will not pay proportionally more through national insurance contributions. The Bill does not come into effect until the next financial year, and we shall have a Budget before then, which will change tax rates, or at least tax allowances, for the next financial year. There would be no great problem about holding hack a 1¼p tax increase until tile Budget. The Government would get the same amount of extra revenue for 1981–82.
Why the rush? The money did not have to be raised by the use of the Bill. Most of the contents of the Bill would have been included in an order that would have been

debated for one and a half hours late at night, but the Government have chosen to use primary legislation to raise the money.
Why did the Government not raise the money by an increase in income tax? The answer, of course, is that they are committed not to raise income tax. If ever a Government were hoist on their own election promises and hasty measures on taking office, this is that Government. After reducing the standard rate to 30p, they would have considerable difficulties with their Back Benchers if they started to increase it. They have therefore used the backdoor method of the national insurance fund to raise the money.
In the debate on the Queen's Speech the Chancellor of the Exchequer had the gall to try to give the impression that it was the fault of the Government Actuary that the Bill had to be introduced. The right hon. and learned Gentleman was asked why he had not increased the upper earnings limit within the ceiling. His answer suffices for the general tenor of the Government's argument:
Because the figure arrived at by way of conclusion follows from the Government Actuary's analysis of what it is prudent to impose."—[Official Report, 27 November 1980; Vol. 994, c. 900.]
I assume that that is an equally sufficient answer to those who ask why the impost is 1 per cent.
The Secretary of State was fond of saying in Opposition that the Government Actuary's analysis was based on his assumptions. But those are assumptions that he is directed to use by the Government. The Government cannot try to dissociate themselves from the decision as the Chancellor of the Exchequer sought to do.
The Government Actuary has been instructed to use average unemployment of 2·3 million for 1981–82, average earnings of 10½ per cent. more than in 1980–81 and the fact that there could be a benefit uprating in November in line with the expected movement in prices.
Two qualifications to those instructions must be made. First, the Government are committed to knocking 1 per cent. off the old-age pension increase next year. Secondly, invalidity, unemployment, sickness, industrial injury and maternity benefits may be raised, under the powers that the Government have taken this year, by 5 per cent. less than the rise in prices. I suspect that when the Government Actuary issues his report on the current financial year of the national insurance fund we shall see a different estimate of surplus or deficit. I repeat our complaint that we are dealing with figures that will change substantially in the financial year for which we are legislating.
The Government are telling the nation that they need £1 billion. Some of my hon. Friends will attempt, by amendments Nos. 7 and 9, to split the 1 per cent. impost half and half between employee and employer, as has been done in the past. That proposal has a certain equity about it. The Secretary of State must give us a little more detail and explain why the employee will have to pay the whole impost.
It seems that of the 1 per cent. that vie are debating ¼ per cent. is required for the National Health Service. The questions that I asked about that in winding up Monday's debate were not satisfactorily answered, and I hope that the Secretary of State will answer them today.
I questioned the split-up of the policy decision changes referred to in the White Paper that was issued this year. I am chasing up the £121 million that the Government expected to get for the NHS by imposing charges on road


accident cases, removing the exemption from dental charges for young people, tightening up the use of the NHS by foreign visitors and charging for sight tests. The sight test was the only one for which we were given a figure for the extra input to the NHS. It was about £10 million or £11 million. That leaves £110 million split between the other three policy decisions with which the Government now say that they cannot go ahead. I hope that we shall have a breakdown of that. I hope also that the Minister has been provided with the figures.
7 pm
That accounts for only ¼ per cent. By no stretch of the imagination is that new money for the National Health Service, in view of the implication in the White Paper. Another ¼ per cent. is required in the normal course of the national insurance fund operations. There is not too much complaint in principle about that. It would have been required according to the Government's forecast of average unemployment in the same way as a ¼ per cent. increase took place in April this year. We claim that ¼ per cent. of the 1 per cent. is legitimate. It is a tragedy that the Government forecast an average unemployment level of 2·3 million. The implication is that the figure will be much higher than that.
We take extreme exception to the remaining ½ per cent., which we shall debate at great length on clause 2. It involves the removal of the supplement from the national insurance funds to the Treasury. There is no good reason why that ½ per cent. should not be split between the employer and the employee. It is a shift of resources from the taxpayer to the backs of employees. The Government's only argument is that they do not wish to burden industry. The Secretary of State nods in agreements, but the Government are burdening industry substantially by the measure that we are debating.
We have learnt from debates and press comment that the effect of the increase on employers is considerable, simply because of the spill-over effect of the national insurance surcharge, the change in the rates and the expected change in inflation. I accept that employers would have had to pay extra anyway. The Government say that they want to relieve employers of their burdens. But they have not done that, because they are imposing a burden. They are putting the impost on employees. Employers pay corporation tax and others pay capital transfer tax, capital gains tax and even income tax. The burden could have been shared. I suspect that the Government might change the income tax rate in the next Budget, but it is best to get this money under the belt for next year.

Mr. Andrew F. Bennett: I am a little worried that my hon. Friend might be falling into the trap of talking too much about the employers' and employees' contributions, as though they can be kept separate. Many employers manage to shift the burden on to their employees. One must examine a firm's overall wages policy and costs to know whether the burden falls on the firm or on the employees. There is much danger in talking in simplistic terms, which we are forced to do on the amendments. The matter is more complicated than the Government admit.

Mr. Rooker: My hon. Friend is correct. Some of the more detailed issues can be discussed on other

amendments, one of which was tabled by Members from the Liberal Party. At least they could find time to table one amendment, unlike Conservative Members.

Mr. Patrick Jenkin: Members of the Conservative Party provided the Bill.

Mr. Rooker: We know that Conservatives are delighted and tickled pink with the contents of the Bill. That is proved by their absence from the Chamber tonight.

Mr. John Major: The hon. Gentleman should look behind him.

Mr. Rooker: When the number of the Conservatives participating in the debate equals the number of my hon. Friends who are participating, the Government will have a charge to make against the Opposition.
One has to make points in simplistic terms because of the way in which the Bill is drafted and because of the restrictions on drafting amendments resulting from the timetable and the Ways and Means resolution.
All of the 1 per cent. impost falls on employees. If any of it were put on to employers, many of them would simply lump the national insurance contribution with the wages bill and put the entire 20 per cent. on to the consumer. Employers do not attempt to take a share of the burden. I am drawing a distinction between the 0·5 per cent. due to removal of the Treasury supplement and the other 0·5 per cent. that is not due to its removal because it is related to general taxation, of which employers pay an unequal share.
If not the most central issue, this is the most expensive one in terms of raising money from the 22 million people who are lucky enough to have jobs. Whatever the Government might do about tax allowances and the standard rate of income tax, they will not be able to claim that they are fulfilling their manifesto commitment to reduce taxation. They have increased the rate of taxation on the insured population twice this year. In just over 12 months, the burden has increased by 1¾p in the pound for the majority of people. It has changed by almost 8p in the pound for many low-paid workers at the margin.
People are not worried about net income alone. They are worried also about the stoppages and the effect on the extra £1 that they might earn by way of bonus or overtime. The majority of low-paid workers are women who work part-time. Their tax burden is increasing apace under this Government and under the Bill. There is no doubt that £1 billion is a lot to impose upon employees. It is grossly unfair.
I hope that my hon. Friend the Member for Birkenhead (Mr. Field) will not make the plea that he made on Monday for Government Members to seek to overturn the Government's case. We accept that they will not do that. We accept that we shall not win the vote. However, the majority of working people will understand what the Government are doing by pushing the Bill through. In short, it is to increase their tax burden.

Mr. Richard Wainwright: I speak particularly to amendment No. 6, in the name of Liberal Members, which was tabled in response to an invitation from the Chief Secretary to the Treasury, given when he wound up for the Government in the Second Reading debate. He said:
The hon. Member for Isle of Ely (Mr. Freud)"—
the Liberal spokesman on these matters—


said that there is a poverty trap difficulty in what is being proposed I cannot deny that. It is a subject more suitable to those, detailed examination that only a Committee stage can provide, but I took note of what the hon. Gentleman said."—[Official Report, 8 December 1980; Vol. 995, c. 1072.]
Our amendment is a direct response, because it proposes that the additional 1 per cent. impost shall not apply to wages of less than £85 a week.
There is no doubt that the Bill adds substantially to what was already the worst poverty trap that we have had in this country. On 8 December, reviewing the Bill, The Times said:
Those effects are the opposite of the Government's declared aims of removing disincentives.
The changes mean that 50,000 of the lowest paid will have their marginal tax rate increased by 6·25 per cent. next April compared with their position before the Budget.
Those earning £40 a week will be able to keep only 62·25p of e very extra pound they cam. On earnings of £500 a week high earners will be able to keep 40p of every extra pound, compared with 17p before last year's Budget.
In addition 90,000 families receiving family income supplement and other means-tested benefits will have an effective marginal tax rate close to 100 per cent.
That is not what the Government told the people when they were seeking election in 1979. The House has so many times heard a recital of the broken promises that I do not want to weary the Committee with it at length tonight. It is sufficient to remind hon. Members of chapter 3 in the 1979 Conservative manifesto, with the bold heading
A more prosperous country
Under the sub-heading
Cutting Income Tax",
we read:
We shall cut income tax at all levels to reward hard work, responsibility and success; tackle the poverty trap
and so on. It is just as well that the very subtle draftsman used the word "tackle". Indeed, the Conservatives have tackled the poverty trap to some tune, by elevating it to a degree of horror that we had not previously seen.
The social policy research unit at York university recently declared that the poverty trap had never been worse. It is so far-reaching now that, in the opinion of the York university researchers,
it would be much more accurate to describe it as a poverty plateau",
because instead of applying to a fairly narrow, although very hard-done-by, section of the population, it now any lies to a wide hand of people over a wide range of wage scales. Our amendment is an attempt to remove part of the addition to the poverty trap that the Bill undeniably creates.
It will no doubt be said—because the House is often misled in this matter—that by removing the 1 per cent. addition from a number of wage earners we should create a deficit in the national insurance fund for one year. It cam tot be said too often that there is nothing wrong with that For example, in 1977, on the recommendation of the Government of the day, the House deliberately voted national insurance changes in the expectation of a deficit. As is well known, and as the Comptroller and Auditor General has pointed out before now, there is no statutory obligation that every year the fund's income shall at least balance its outgoings. The state of balance is very much to be over a period of time.
There is no reason at all why this impost should be inflicted in this one year. That was another respect in which the Chancellor of the Exchequer on 24 November, in his mini-Budget, failed to spell out the real position as fully as the House was entitled to expect. That is the

reasoning behind our amendment — that the poverty plateau was bad enough and extensive enough already, and that it was wrong and unjust that the Bill should further narrow the difference between being on unemployment benefit and being in work.
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I conclude by reminding the Committee—although I am sure that hon. Members will not require much reminding—of the appalling disincentives to taking a low-paid job. My constituency is by no means scattered—it is in two metropolitan boroughs—but I have many distressing examples of people who lose through going out to work, by the time they have paid their appalling bus fares and have had meals out, which working in a distant place involves, and have lost the former reduced rate of income tax, which this Government abolished. It cannot have been the intention of Conservative Members, when they took their seats on the Government Benches that people should lose in that way I beg them to repent of this further error before they add it to their catalogue of crimes.

Mr. Ennals: The Secretary of State and I should be in agreement in strongly objecting to the use of national insurance contributions and payments into the national insurance fund as a simple but grossly unfair means of taxation. As I pointed out in an earlier intervention, when the right hon. Gentleman was in Opposition he voted against the concept of a surcharge, even though that surcharge affected both employers and employees.
It is hard that the right hon. Gentleman has suffered this form of punishment—for that is what it is—from the Treasury, which has decided that it wants to minimise the extent to which it increases the rate of income tax, if that is what it will do, or increase taxes at all. The Treasury is in fact simply using the fund as a means of collecting money for itself.
That means that the national insurance contributions bear no relationship whatsoever to the level of benefits and the entitlement of people who make the contributions. Beveridge and those Labour Ministers who created the national insurance fund and the National Insurance Act, which was the basis of it, would turn in their graves if they thought that Beveridge's concept would be used by Governments simply as a means of raising extra revenue—revenue that they did not have the guts to raise through ordinary taxation, particularly when carried our in such a retrograde way, imposing a tougher impost on the lower-paid than on the higher-paid.

Mr. Keith Best: Does the right hon. Gentleman wish to dissociate himself wholly from the last Government's action in imposing a 2 per cent. impost, which did not even go into the national insurance fund?

Mr. Ennals: I do. If the hon. Gentleman had been here for the Second Reading debate, he would know that I made precisely that statement. I said that it was wrong that any Government, including the Government of which I was a member, should use the fund in that way. I am being totally consistent. I was under an obligation, because decisions were taken that I had to carry through. I hope that the Secretary of State is in the same position, such is my respect for him from time to time—

Mr. Race: When?

Mr. Ennals: There are moments. The right hon. Gentleman has shown one or two examples of kindness to


me. I shall not mention them now. I merely say that there are moments when I have this feeling for him. I am feeling neither sorry for him nor angry with him. One of the accusations that I have frequently made against him is that he is a Treasury Minister. I do not know whether the Bill proves that he is or whether the Bill has been forced upon him by his Treasury colleagues.
There is logic in the Liberal amendment, which has been referred to by the hon. Member for Colne Valley (Mr. Wainwright). If the Government are to use this method of raising £1 billion, it would seem fair to use the principle that has been used over many years—namely, increasing the contributions of employers and employees at the same time. That has not been done. The burden has been placed almost entirely on employees. It is the equivalent of about 1p in the pound on the standard rate of tax.

Mr. Patrick Jenkin: The right hon. Gentleman and the hon. Member for Birmingham, Perry Barr (Mr. Rooker) might like to explain how they can reconcile what they are now saying—namely, that the burden should be shared between employers and employees—with the most almighty row that they both made a couple of weeks ago because it was suggested that my right hon. and learned Friend the Chancellor of the Exchequer was somehow concealing the fact that there were to be increases for employers. It seems that the right hon. Gentleman is trying to have it both ways, and I hope that he will explain the inconsistency.

Mr. Ennals: There was fury in the House as well as among employers, in the CBI, in the press and elsewhere, because it was felt that the House and the country were being misled by the Chancellor's statement. At that stage we did not enter into the argument whether the raising of the money should be shared between employers and employees on an equal basis. We argued that the gist of the statement was that the burden would be placed on one side. The right hon. and learned Gentleman gave no indication that another £1 billion would have to be paid by employers. That was the nature of the row, and the right hon. Gentleman knows it.
What effect does the right hon. Gentleman think that these provisions will have on wage claims when the people realise what has happened? Will they not recognise these provisions as an impost upon their earnings at a time when inflation is higher than the Government's stated 6 per cent. norm? Even those who are forced to accept 6 per cent. settlements will be expected to pay the higher rate of contribution to national insurance. Surely the Government expect that there will be a reaction on the part of employees when the Bill comes into effect.
As my hon. Friend the Member for Birmingham, Perry Barr (Mr. Rooker) stressed, there will be no more money for the National Health Service as a result of the division of the extra money that is being raised. There will not be an extra penny for the NHS. It will not be enabled suddenly to say "We shall contribute £25 million in response to the Select Committee on perinatal and neonatal mortality, or £X million for renal dialysis, or any other specialty. "The money will go to the Treasury. That was said honestly by the Chief Secretary, who replied to the

debate on 8 December. We shall be dealing later with the reduction from 18 per cent. to 14½ per cent. of the Treasury supplement. The right hon. Gentleman said:
it plays a major part in reducing the public sector borrowing requirement."—[Official Report, 8 December 1980; Vol. 995, c. 1072.]
That is the only way in which the Treasury is considering this operation. It considers that it is a simple way of getting itself out of a desperate financial situation of its own making. I hope that my right hon. and hon. Friends will support the amendment when the Committee divides on it.

Mr. Race: These are important amendments because they relate to the form of taxation and insurance contributions that we should pay as employees and employers. They raise a number of general issues as well as the specific ones that are reflected in the amendments.
I share the view of my right hon. Friend the Member for Norwich, North (Mr. Ennals) that the amendments should be supported on the ground that there is a degree of equity in the proposal that any increase that is thought to be required in national insurance contributions should come from both employers and employees on an equal basis. That has nearly always been the practice in the past when Governments have asked for increases in contributions. They have normally increased both sets of taxation. On this occasion, the Government propose to increase taxation by imposing an extra 1 per cent. on employees by a variety of methods and to make no specific increase in employers' contributions directly, although there will be indirect increases in employers' contributions.
I am sorry that the Under-Secretary of State, the hon. Member for Wallasey (Mrs. Chalker), has left the Chamber. I wanted to refer to a remark that she made earlier about taxation.

Mr. Andrew F. Bennett: On a point of order, Mr. Godman Irvine. As this is, in effect, a Finance Bill, is it not reasonable for the Committee to have a representative from the Treasury on the Government Front Bench?

The First Deputy Chairman: The hon. Gentleman knows that that is not a matter for the Chair.

Mr. Race: I was saying that I am sorry that the hon. Lady has left the Chamber. In the previous debate she referred to the form in which national insurance contributions are paid and spoke about their progressive or regressive nature. I think that she said that national insurance contributions were mildly progressive. When she said that, I pricked up my ears. It is the most extraordinary statement that I have heard in a long time in this place. It must have been made on the assumption that those who earn £200 a week, for example, pay a higher cash amount in national insurance contributions than those who earn, for example, £50 a week. That must be so because we pay the same percentage in national insurance contributions, although the cash outcome is different at different income levels. The more one earns, the more one pays.
That cannot be described as mildly progressive. It merely means that the richer one is, the more one pays in cash terms. The percentage of income that is paid by someone earning £200 a week is the same, notionally, as the person who is earning £50 a week. Therefore, the argument that national insurance contributions are mildly progressive should not be tolerated by the Committee.


That relates to the amendments, which seek to reduce the impact of the regressive form of taxation. They seek to reduce the regressive form of the taxation in a way that is more acceptable to employees.
Much mention has been made of the effect on the low-paid of the increase in contributions. Low-paid workers, male and female, are hound to pay the same percentage of their total income above the threshold of £27 per week n contributions as the person earning £200 a week. The Minister cannot therefore argue that it is a mildly progressive form of taxation. It is regressive.
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It has other unacceptable features. It is an employment lax. It is as bad as selective employment tax, which was attacked at great length by the Conservative Opposition during the Government of my right hon. Friend the Member for Huyton (Sir H. Wilson) between 1964 and 1970. It is, therefore, absurd for this Government now to argue that it is a form of taxation as acceptable as income tax.

Mr. Best: Does the hon. Gentleman accept that placing a greater burden on employers is likely to lead to further unemployment?

Mr. Race: That is a valid point. However, we must remember the context in which the increases are being made. Substantial concessions are available to companies in the form of deferments on corporation tax. They pay only a small proportion of their before-tax profits in corporation tax and other forms of taxation. For example, tarts of the oil and banking sector have paid little, if any, corporation tax over the past few years. British Petroleum c id not pay any corporation tax in the last financial year far which it reported its pre-tax and after-tax profits. Companies are faced with serious problems over manpower and selling their goods in the market glace, but they pay less tax in real terms than the individual employee.

Mr. Dobson: Reverting to the question whether these national insurance contributions are regressive, is it not true that even if they could be considered progressive they are much more unfair to the low-paid than a system that would take a similar amount from general taxation? However, my hon. Friend and I agree that they are regressive.

Mr. Race: I agree. However, they are less so than a year ago. The Government have abolished the 25 per cent. tax band—the slice of earnings on which people paid only 25 per cent. tax instead of 30 per cent. That change was made in the Budget of 12 June 1979. However, national insurance contributions are still significantly more regressive than income tax on the present basis, even in the context of the Government's extraordinary measures to abolish the 25 per cent. tax band and to index the higher rate bands They have protected higher income earners and attacked the ability of the low-paid to defend themselves against tax increases at that level. The imposition of the 1 per cent. increase, the freezing of the lower point of starting national insurance contributions at £27 per week and the abolition of the 25 per cent. rate band penalise the lowest-paid for the economic policies of this Government.
Amendments Nos. 7 and 9 raise a number of other points. Should the Government be introducing what is essentially an employment tax at this time? The hon.

Member for Anglesey (Mr. Best) mentioned the problems created for employers by the increased national insurance contributions. The Government, through this Bill and other measures introduced a few weeks ago, are putting a tax on employment. They will encourage employers to shed as much labour as possible in order to reduce their national insurance contributions and cut costs. Unemployment is rising by 100,000 a month. It is irresponsible of the Government to bring forward proposals that will have a direct ill effect on employment.
We must also consider the effect of the increases in national insurance contributions on the ability of low-paid workers to defend their living standards. We should not gloss over that. We must debate the extent to which they can defend their living standards against the Government. A worker taking home £45 or £50 a week needs to protect his real take-home pay against price and tax increases. The only way to do that is by boosting his wage packet, as the Government refuse to introduce price controls. The only way in which a worker can protect his real take-home pay is to increase the wage claim to his private or public sector employer.
The increase in taxation through the increased national insurance contribution will therefore properly be reflected in trade union wage claims. Trade unions have to bear in mind not only the retail price index but the level of income tax and national insurance contributions.
The Government pretend that we are talking about funding social benefits and not about taxation. That is a piece of hypocrisy, the like of which I have not heard for a long time. Nye Bevan used to say, when addressing Labour Party meetings throughout the country, "Comrades, I'll let you into a State secret. There ain't no fund." He argued that it was merely a bookkeeping exercise. It is myth and hypocrisy to regard the proposals to increase employees' contributions by 1 per cent. as necessary to balance the books. The Bill simply increases taxation, and our amendments say that if the burden is to be applied it should be shared equally between employers and employees.

Mr. Best: The hon. Gentleman makes my point for me. He says that these matters will be taken into account in future wage negotiations. He neglects the other aspect of my argument, which is that employers do not have that facility. If the burden is placed upon them, they will have to shed labour, which will lead to greater unemployment. Surely the hon. Gentleman understands that.

Mr. Race: That is a remarkable intervention, because the one facility that employers have which emloyees do not have is a captive audience. Not only are they able to reduce their static costs—labour, rates and so on—and reduce their marginal costs, but they can pass on through price increases any increased costs. That is precisely what they will do as a result of these changes. They will recoup higher national insurance payments through price increases or by reducing the amount of labour they employ.
We are proposing that the 1 per cent. increase in contributions, with which we do not agree—because it is an attack on the low-paid, it reduces demand in the economy and is unnecessary—should be shared equally between employers and employees. Employees will be seriously affected if they alone bear the burden. The social cost to the community will be just as great as the hon.


Member for Anglesey implied it might be if employers had to bear their part of the increase. The hon. Gentleman argues that if the burden is shared some labour might be shed. But if employees carry the whole burden family budgets will be seriously hit in terms of their ability to pay rent, rates and grocery bills.

Mr. Field: I was following my hon. Friend's earlier argument about the effect of the Bill on wage negotiations in the coming year. He was arguing, I believe, that workers and their trade unions would take both price increases and tax increases into account. Can he provide technical information on that point? Whenever we debate national insurance contributions, there is always a discussion about whether they are a tax. As they clearly are a tax and should be thought of as such, will the increase show up in the tax and prices index which the Government produced early in their period of office as a way of showing that prices were rising less fast than the retail price index? Shall we see in the coming year, therefore, many more trade unions using the TPI as a more accurate way of judging changes in the living standards of workers?

Mr. Race: That is a most interesting contribution. Trade unions have ignored the TPI because it does not include a large part of the extra tax burden that the Government have imposed. I have no doubt that trade unions will continue to rely, as they traditionally have, on the RPI as the main source of their prices information. They will add on to that, as is proper, any increases in income tax or national insurance contributions flowing from Government decisions.
I am certain that that will have a major effect on wage claims over the next few months and for the next pay round. This 1 per cent. increase in contributions must be related to the Government's proposals this winter for a 6 per cent. pay policy. The Government are saying that earnings must rise by that amount only, certainly in the public sector. Cash limits in that sector are set at 6 per cent. But the Bill means that, before any price increases or tax rises likely to be included in next April's Budget are taken into account, 1 per cent. of that increase will already have been swallowed up. That action alone invalidates the 6 per cent. pay policy.

Mr. Field: It makes it 5 per cent.

Mr. Race: My hon. Friend is wrong, because it is 6 per cent. on earnings and that means 3½ per cent. on rates of pay. I have worked out that the hospital domestic can expect on that basis to get about £98 a year with a 3½ per cent. increase on the basic rate before stoppages.
That is another reason why the Government are wrong to insist on employees bearing all the burden. If they want their 6 per cent. wages policy to be effective, they must persuade workers and trade unionists that the only way to obtain a real increase in wages is by agreeing with their 6 per cent. policy, and that will not happen if they introduce measures that undermine it from the outset.

Mr. Field: Do I understand the point correctly? Is my hon. Friend arguing that the Government's wages policy of 6 per cent. on earnings would, if successful, mean 3½ per cent. on overall rates, and that of that 3½ per cent. 1 per cent. would be clawed back by the Bill?

Mr. Race: That is right. [Interruption.] Does the Secretary of State want to intervene on this? Perhaps he or the Chief Secretary to the Treasury, who has just joined him, have information to which I am not privy.
The cash limit specifically demands a 6 per cent. growth in earnings over the next 12 months, but the final figure will depend on earnings opportunities in particular industries. In the National Health Service, a 24-hour operation, earnings opportunities are substantially greater than in other industries. But that means that, in some parts of the public sector, the only increase will be 3½ to 4 per cent. on rates of pay, not the 6 per cent. specified.

Mr. Field: I am more puzzled now by what my hon. Friend is saying. The Government's wages policy of 6 per cent. means 6 per cent. on rates of pay, the lower denominator. That will mean 3½ per cent. on earnings. The national insurance contribution is based on earnings and will therefore apply at the low level. Am I still wrong?

Mr. Race: The Government's proposal is 6 per cent. gross on earnings, and that means that the increase in wage rates would have to be 3½–4 per cent. Therefore, some part of the 6 per cent. would be available for overtime, increased shift work premiums and so on. That has been built into the cash limits. The position under the Bill is that the national insurance 1 per cent. increase would be paid on earnings of 6 per cent. rather than on the rate of 3½ per cent.
Some individuals will be seriously affected. They will not receive the full 6 per cent. increase. It is an illusion to believe that every worker will receive a 6 per cent. pay rise. Many workers will not receive the full 6 per cent. increase because they will not have the earnings opportunities to do so. That applies especially to those who Will be badly affected by clause 1—for example, the part-time workers who earn about £27 a week and who do not have earnings opportunities. They are specifically excluded from receiving overtime payments by their contract of employment. They have to work up to either 40 hours or 33 hours before they can claim any further overtime payments. A substantial number of people will be badly affected by the 1 per cent. increase in contributions. That is a good reason why it should be reduced to ½ per cent.
There is a good argument for reducing the proportion paid by employees and loading some of the burden on to employers, especially in relation to the low-paid. Their jobs are being taken away and their earnings opportunities are being restricted. It is another serious blow to them. It is humbug for the Government to talk about national insurance contributions being mildly progressive. We should throw it back in their faces.

Mr. Field: I apologise for not being in my place to hear the opening comments in this part of the debate. If I understand correctly the remarks of my hon. Friend the Member for Wood Green (Mr. Race), the gist of the case is that because the national insurance contributions and increases are regressive, rather than progressive, the burden should be shared between employees and employers.
I wish to develop the idea that there is a case for the increase being put on to the shoulders of those in work and not on to those of the employers. The contribution of the hon. Member for Anglesey (Mr. Best) is important on this point. If we follow that line of argument, it is crucial that


we consider the base on which we are asking workers to make a contribution to the insurance fund. Briefly, I am saying that there is a case for the increase to be shouldered by employees. I go further and say that there is a case for a further increase for employees if we receive concessions on rights to benefit. That argument can be entertained only if we consider the basis on which we take contributions from workers, especially the low-paid. I agree with the arguments put forward by my hon. Friend the Member for Wood Green on that matter.
At this point I wish to speak to amendments Nos. 5, 6 and 7. Amendment No. 5 is a clear statement removing the increase, unless one shares or changes the whole basis on which we ask for national insurance contributions amendment No. 6, coming from the Liberal Benches, would divide the contribution between those earning up to £85, allowing them to pay at the old rate, and those earning above that level, who would pay the new increased rate. Amendment No. 7 would make the increase only ½ per cent. No doubt that ties in with the argument that there is a clear case for sharing the burden with employers.
Unfortunately, I was not in the Chamber to speak again on the first set of amendments. However, the point that I wished to make then is relevant now. I was genuinely amazed by the Minister's comments. The hon. Lady put forward the argument that we should not be too concerned about the increased burden that the low-paid would endure under the Bill because they receive a range of other help—for example, family income supplement. The Secretary of State and the Minister were at pains to say that Opposition Members were mistaken about the way in which the poverty trap works. They said that we gave a snapshot of the real world and that the real world did not operate in that way. They said that the trap should be viewed rather like an old-fashioned time machine camera.
Let us consider the effect of this measure and the contribution of the low-paid. If the clause is passed unamended, there will be an increase of about £2·17 a week for the low-paid. At a stroke, the Government will be taking £2·17 off the family income supplement as soon as the Bill comes into operation. If the Secretary of State replies t3 the debate., I hope that he will give us information about how many family income supplement recipients receive less that £2·17 per week. By this measure alone, how many people will lose the whole of their family income supplement?
While we might have an academic argument as the evening progresses about how the poverty trap works, and whether this side or the other side of the Chamber has a more accurate vision of how the low-paid are affected, there cart be no question but that considerable numbers of those helped by the family income supplement payments will lose all their benefits because of this measure.
I wish to return to some of the remarks that my hon. Friend the Member for Wood Green quite rightly made about the effects of the measure on the low-paid. Like him, I am sorry that the Minister is not in the Chamber. Obviously she will return, she will be told of our comments and she will respond to them. I see that my hon. Friend the Member for Barking (Miss Richardson) is in her place. She can help me with my figures. We have only 19 lady Members of the House. Perhaps I should say women Members. I had not intended to use a sexist term, but I have done so.
Overwhelmingly, the issue of low pay affects women workers, yet one of the 19 women Members of Parliament

is a Minister at the DHSS, which has a record of introducing measures that hit viciously at women workers. The Government have proposed a scheme for maternity pay that redistributes the benefits available. The proposals for a sickness scheme redistribute money from families to the childless, again hitting at women and the children that they look after. The measure that we are discussing tonight is a third prong in the attack on low-paid workers. It massively increases the contribution which low-paid workers, mainly women, make to the national insurance fund. Let us remember that most low-paid workers are women. If we are at all concerned about the least privileged, those who gain least from the community's resources — which is another way of discussing the inequalities between the sexes in our society—there is a powerful case for saying—

Mr. Race: One of the points that I made earlier to my hon. Friend the Member for Holborn and St. Pancras, South (Mr. Dobson) was about the ability of women workers to register as unemployed. My hon. Friend the Member for Birkenhead (Mr. Field) referred to the attack on women workers. Is he aware that a school meals worker who is made unemployed by a county council education authority can say to the unemployment benefit office that she wants to register as a part-time worker and have a contribution record, yet she cannot register as unemployed and receive unemployment benefit? At the same time, however, because of the actions of the Government, she is expected to pay substantially more in insurance contributions for the advantage of having no benefits whatever.

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Mr. Field: Yes, I was aware of that and I shall return to the point before we cease debating this group of amendments. The point could be made again and at greater length on the other amendments that we shall discuss.

Mr. Best: I hope that the hon. Gentleman will be fair. I think that he mentioned the maternity grant. It was my understanding that The proposals for redistribution would make it non-contributory, so that many more women would be eligible than are presently eligible under the rules. Will the hon. Gentleman clarify that?

Mr. Field: The hon. Gentleman is correct in one way. That is just one part of it. We now have proposals to reform radically the whole form of support for women in the first weeks of the child's life. The objection is not that one cannot make more sense of the proposals and make sure that, within them, poorer women get more, but that men, who are as a group more privileged than women in our society, will not be asked to contribute one extra penny to those reforms.
Women are a weak group in the community, and we have now come up with a wonderful way in which to reform the forms of support that we give to maternity, if I may use that term as a general heading. We are to redistribute from slightly richer women to slightly poorer women. There is a case for leaving the richer women with the benefits that they have and redistributing from richer men to women generally.
That is the point that we ought to bear in mind with the sick pay proposals that we are discussing tonight. It applies particularly to amendments Nos. 5, 6 and 7, to which many of us will address ourselves. It is an attack on low-


paid workers, who are overwhelmingly women workers, and, therefore, the proposal cannot be divorced from other measures which the Government are taking and which are putting women workers at a greater disadvantage.
That is why I said that I regretted that the Under-Secretary of State was not in the Chamber, as she is in a privileged position, being one of the 19 women Members in the House of Commons. One would have thought that on these issues, which vitally affect the half of the population who are women, we would have had a better fight from within the Department to protect the interests of low-paid workers, who are overwhelmingly women.
My next point, which has already been raised in the debate, is about which group should pay the increased contributions. Here I depart somewhat from the argument put forward by my Front Bench. If we make a case for the whole of this contribution increase, or any future contribution increases, to be borne only by those in work, that can be a just move only if we look at the basis on which we ask for contributions from those in work. In other words, I agree with the emphasis that my hon. Friend the Member for Wood Green put on drawing a distinction between the tax system and the national insurance system and showing how, on balance, the tax system was more progressive than the national insurance system.
Given that the difference is such a small one, I am reminded somewhat of the medieval theologians who, for hundreds of years, happily debated how many angels and archangels could stand on the head of a pin. Now that the Government have abolished the lower rate of tax, the tax system is, for the vast majority of workers—apart from the 4 per cent. who pay surtax—a proportional system of taxation. That emphasises the point that it is still a fairer way to raise increasing contributions in this country than the national insurance scheme itself.
I believe, as the hon. Member for Anglesey said, that to increase further the national insurance contributions of employers will put some employers out of a job. Obviously it will not affect most employees, but we are concerned with the people who are at the margin. It might be our children or our mum or dad who are at the margin and are made unemployed. It might be some of our own constituents who are at the margin and who are affected in that way. If we support that argument, given all that we have said here about how regressive the national insurance system is as a form of raising revenue, it is axiomatic that those of us who say that the cost should not fall on employers should say that we will try to persuade the Government to reform the whole basis of national insurance contributions for employees, so that we can build it into a progressive form of taxation or national insurance contribution.
That is why, on Second Reading, several of us made the point about the need to raise the ceiling. I shall not dwell on that because we shall return to it in the debate on the clause. What is necessary is to lift out of the bottom of the scale a number of those who are paying tax. The important point is that once people cross the national insurance threshold they pay contributions on every pound, and the national insurance threshold now is almost the same as the tax threshold. This means that people not only start to pay tax; they start to lose their rights to means-tested benefits. If people are at the bottom of the FIS entitlement, they will lose that entitlement.

Mr. Race: Is it not clear that the impact, in employment terms, of increased contributions on the employer—not the employee—is very much conditional on the context in which those increases are made? In other words, if we have full employment, relatively stable prices and a firm demand in the economy, with few industries threatened by imports on any substantial basis, an increase in national insurance contributions of the kind proposed by the Government for employers, and of the kind proposed in the amendments, is marginal indeed to employment prospects. It is only where a large number of economic variables are impinging on employers and causing them to reduce employment levels that it becomes slightly more significant.

Mr. Field: That is right. I believe that many people are getting very near to the unemployment queues, apart from the millions who are already in the queues.
My hon. Friend referred earlier to how similar this part of our taxation system was to the selective employment tax. We know that the National Institute of Economic and Social Research made a detailed study of the impact of that tax. We know that, wherever possible, that form of taxation was passed on in increased prices. That would be the effect here of increasing the employer's contribution. Where it could not be passed on, there would be an effect on job prospects. We should not do it without making a firm commitment to reform the basis of insurance contributions by employees as well.

Mr. Best: As always, there is great persuasion in what the hon. Gentleman is saying. As I understand it, he is putting forward an argument for graduated payments by employees of national insurance contributions. Has he really thought that through? I accept that a form of regulation is fair—we have it in any event in income tax—but it is already graduated in a way, inasmuch as it is a percentage on earnings. Obviously, as the earnings increase, so the contributions increase. Has the hon. Gentleman thought of the administrative burdens that would be placed on employers as a result of what he is suggesting? He has been kind enough to accept my point that a further burden on employers in contributions is likely to lead to greater unemployment, but surely the greater administrative cost and administrative inconvenience would also lead to greater unemployment.

Mr. Field: The hon. Gentleman should not underestimate the intelligence of employers in the public and private sectors. If the Revenue sends out tables showing how to work out deductions from pay, employers will be able to work them out, just as they have done in the past. No increased burden will result from devising a fairer way of getting contributions from employees.
I am grateful to the hon. Gentleman for his intervention. We are agreed that any increases that are made should be put on employees, as long as the system is more progressive. To hint that the system is progressive because it takes a certain amount from income as income rises is to miss the fundamental point. As soon as a person crosses the threshold, he pays his insurance contributions on every pound earned.
The hon. Gentleman must have been busy on parliamentary duties elsewhere when we debated the first group of amendments. At that time we dwelt on this matter for some time and showed how similar it was to the old exemption system, which was abolished by Austen


Chamberlain, I believe in the 1920 Budget. At that time our tax system was based on the same principle,—namely, that allowances were of value to a person only if his income was below a certain level. Once that point had been crossed, the whole of a person's income was subject to tax. That is still true of the national insurance system, and that is why we fought—and lost—the debate to raise the starting point for national insurance contributions.
I have been trying to show that a case can be made in part for debating these amendments. We are discussing amendments Nos. 5, 6 and 7 because we want to draw attention to the effects on lower-paid workers. If we are to hold a sensible debate, we must put a human face on those lower-paid workers. That face is the face of women. This measure cannot be considered separately from the other social security changes that the Government are making. They represent attacks on women workers and on women generally. I am sorry if I am beginning to bore the House by my pleas.

Mr. Cryer: Very good.

Mr. Field: I am grateful to my hon. Friend for his support.
We must consider how we can spread the money, earned over a period of 20 to 40 years, over a lifetime of 30 or more years. As a group, men are more privileged than women. How can we achieve a redistribution of money from men to women? The Government have introduced a series of measures that have increased the status of men at the expense of women. This and other social security measures cannot be divorced from the tax changes that the Government have made.
The Government are trying to balance their books, and they have got into difficulties. I have never accused the Government of dishonesty. Nevertheless, they have ruthlessly redistributed money in favour of the rich. The Government said that they were going to do that, and they have done it. No dishonesty is involved. However, it is wrong to elevate the issue of greed to an issue of principle. It is clear that the Government have a mandate for that. Men were the main beneficiaries of tax cuts. We are—

The First Deputy Chairman: Order. I have allowed the hon. Gentleman a certain amount of latitude in the hope that in the clause stand part debate he would make some of the points that he had in mind. The hon. Gentleman should speak to the amendment.

Mr. Field: I am grateful, to you, Mr. Godman Irvine, for that interjection. As you say, I shall have other opportunities to discuss this matter.
I sought to plead in favour of amendments Nos. 5, 6 and 7. The Government are making an attack on low-paid workers, and those workers are mainly women. That cannot be divorced from other Government measures. There may be a case for not increasing the contribution on employers, but one must ask how regressive taxation and national insurance contributions are on employees. If we wish to increase the load, we must make the base progressive.
The Government have had to introduce the Bill. It should have included a major change in the basis on which employees make contributions to the national insurance fund. There might be a case for further increases, provided

that there is a quid pro quo by way of an increase in benefits. One could then sell that to one's constituents more easily than one can sell the present base.

Mr. Cryer: I shall concentrate my remarks on amendment No. 5, which would delete subsection (2). As has been pointed out, that subsection would place a burden of about £2·17 a week on the low-paid. Therefore, it is deflationary. It will result in a diminution in demand and will create a higher level of unemployment. The Chief Secretary argued at Question Time today that it was a means of paying social benefits. He argued that the sum of about £1 billion, which is derived from the increase in primary class 1 contributions, is sufficient or will go towards the revenue necessary to maintain some of the social services. No doubt the Secretary of State would also argue along those lines.
In reply to my hon. Friend the Member for Derby, North (Mr. Whitehead), the Chief Secretary said that if one wills the end—the maintenance of social services—one must will the means. The Chief Secretary is wrong. The Government will take money largely from the poor and give it back to the poor in a convoluted transfer that will subject them to further means tests. That is not good enough.
I turn to a subject that was mentioned on Second Reading, because it is relevant. We are not supposed to talk about it, because it was featured on a television programme. I refer to the £1 billion that was obtained by the Rossminster group through tax avoidance, The Government could consider tightening up tax evasion and tax avoidance instead of adding another burden in the form of clause 1(2). The Government might argue that it would take a certain amount of time to smoke out those smart alec lawyers and to stop tax avoidance. There is no reason why the Government should not increase the public sector borrowing requirement as a temporary measure. The additional contribution of 1 per cent. found in subsection (2) will be contrasted against that televison programme in which well-heeled gents in well-laid-out offices ran schemes for well-heeled people to avoid paying tax. People will say that the measure is extremely unjust. They will want to change the society in which that—

The First Deputy Chairman: Order. I cannot see any link between the hon. Gentlman's remarks and the amendment.

Mr. Cryer: I shall spell it out for you, Mr. Godman Irvine. Subsection (2) proposes that there should be an increase in primary class I contributions from 6·75 per cent. to 7·75 per cent. That is a 1 per cent. increase. My argument is that the increase in this subsection, which is a burden upon the low-wage earner, will be seen as unjust. That is an argument for approving amendment No. 5, which seeks to delete subsecton (2).
I make the point that a short time ago a television programme demonstrated how the payment of about £1 billion had been avoided by a tax avoidance scheme. I am making the point by way of illustration—

The First Deputy Chairman: Order. That is exactly where we came in. I said that I was unable to follow how that could be linked to the amendment.

Mr. Cryer: I am illustrating this in passing, by way of example. This is the usual way of—[Interruption.] Does the hon. Member for Lancaster (Mrs. Kellett-Bowman)


wish to intervene? I do not like sedentary interjections being made by the hon. Lady in that stentorian voice of hers. I do not wish to go down the path that she is suggesting because you, Mr. Godman Irvine, would naturally and correctly call me to order. I was using that illustration by way of example, in passing. I think that it is an important point to make.
I was saying that the subsection should be deleted because it is possible to consider alternative sources of income. I suggest the diminution of tax avoidance, but that might take some time. The Government's argument is that they must have this money in a fairly short time. That is why they are using this quick and easy administrative method of raising money.
However, the Government have already indicated that they are not sticking rigidly to the public sector borrowing requirement target or, for that matter, to the figures for the growth of the money supply. I do not want to go into that, because it is not relevant to the point that I want to make.
My claim that the Government have altered their PSBR target so that they could legitimately accept the amendment to delete subsection (2) is evidenced in The Guardian today. This point was mentioned during Question Time. The heading is:
Biffen's hint of U-turn startles the Right.
That refers to the Chief Secretary—the right hon. Member for Oswestry (Mr. Biffen). This article by Ian Aitken, the political editor, was challenged at Question Time today. The Chief Secretary said that he had the advantage of being at the meeting where this claim was made. On the other hand, so did the person who spoke to Ian Aitken. [AN HON. MEMBER: "Who was that?"] Who indeed? A mole amongst the Conservatives. In the articles, IanAitken said that "in calculating"—

The First Deputy Chairman: Order. I hope that the hon. Gentleman will soon explain how this can be linked to the amendment.

Mr. Cryer: Certainly, Mr. Godman Irvine.

Mr. Andrew F. Bennett: On a point of order, Mr. Godman Irvine.

The First Deputy Chairman: Order. I should like to deal with one point of order at a time.

Mr. Bennett: I understood that my hon. Friend the Member for Keighley (Mr. Cryer) was making a speech. We are talking about £1 billion of extra taxation. Therefore, the Committee ought to look at the alternatives if the amendment is carried. I think that it is unfair that each time my hon. Friend tries to develop that argument he is cut down.

The First Deputy Chairman: The hon. Gentleman would be right if we were having a general Budget debate, but we are discussing a somewhat limited amendment and we must stick to it.

Mr. Buchan: Further to that point of order, Mr. Godman Irvine. I accept a great deal of what you say. But the Opposition, at any rate, and many people in the country believe that fundamentally this is a Budget debate and that the Bill is about taxation rather than social security and national insurance. That is the problem.

Mr. Cryer: That is the point. My argument is that subsection (2) should be deleted. I am putting forward

reasons why subsection (2) should be deleted. I believe that it is unfair. At the same time, if the subsection is deleted, the Bill, which seeks to raise revenue, will be short by £1 billion. The Government will not get £1 billion if subsection (2) is deleted. Therefore, I submit that it is not out of order if, for example, there are alternatives.
Parliament has debates to convince Members to vote in particular ways. That is the pretence through which we go. It is in order to do that. However, we know that, whatever we say, all Conservative Members will support the clause because they are hacks. As soon as the Whip goes out, they follow it. The basis of Parliament is to debate ideas. For example, I might be able to convince the Liberals—who are here in spirit—

Mrs. Elaine Kellett-Bowman: How can the hon. Gentleman convince them if they are not here?

Mr. Cryer: —or anybody else—some of my hon. Friends may have reservations—about the desirability of accepting the amendment by pointing out the alternatives if it is defeated.
At Question Time today, the Chief Secretary said that if we wanted the end of maintaining social expenditure we had to will the means. The right hon. Gentleman said that in reply to a question about national insurance contributions—in other words, about this Bill. Therefore, I should not have thought that it was irrelevant to consider that comment and to suggest alternatives for subsection (2), which we wish to delete.
The Government's claim that subsection (2) must be retained at all costs because their PSBR target has to be met is not true, in view of a speech made by no less a person than the Chief Secretary to the Treasury to a Back-Bench committee of the Conservative Party.

Mrs. Kellett-Bowman: How does the hon. Gentleman know?

Mr. Cryer: I am only quoting.

Mrs. Kellett-Bowman: It is alleged.

Mr. Cryer: It is alleged to have been said. However, one of my hon. Friends overheard the conversation. Not only is it a newspaper report; it is authenticated from another source.

Mrs. Kellett-Bowman: By the Back-Bench committee?

Mr. Cryer: No. My hon. Friend overheard the conversation between the mole and Mr. Ian Aitken, the political editor of The Guardian.

Mrs. Kellet-Bowman: Will the hon. Gentleman tell us who it was?

Mr. Cryer: I do not propose to reveal any secrets to the Conservative Party yet. Mr. Aitken wrote:
He argued that there was a considerable degree of imprecision in calculating such figures as the money supply and public borrowing, and that there were no grounds for despair when things went wrong. But his audience was startled to hear him say that the time had come to abandon such targets in favour of a flexible policy designed to meet the unexpectedly grave economic recession.


8.30 pm
That unexpectedly grave economic recession will be made even graver by the clause and by the raising of £1 billion under subsection (2). That is one of the reasons why we oppose it. By virtue of that quotation, which was hedged around by the Chief Secretary, we are arguing that public borrowing can be increased in order to get over the problem of the £1 billion that the Government are facing.
I should like to go a little further and deal with a number of other alternatives. One short-term alternative is public borrowing. You, Mr. Godman Irvine, have said that this is not a Budget, but we think that it is at least part of the budgetary process. Let us suppose that there is a gap of three or four months between now and the next Budget. That could be covered by borrowing. In the next Budget, an alternative would be to shift this swingeing increase, which will bear heavily on those least able to pay, on to those who are most able to pay. As my hon. Friend the Member for Birkenhead (Mr. Field) said, we should introduce a more progressive basis. Income tax is a more progressive basis.
I was reminded of that when I saw question No. 9 on today's Order Paper, in the name of my hon. Friend the Member for Blackburn (Mr. Straw), who asked the Chancellor of the Exchequer:
'what evidence he has that the opportunities and incentives provided to business and to individuals in his 12 June 1979 budget are working as intended.
Those incentives, which were tax concessions to the well-off, were designed to create jobs by stimulating entrepreneurial activity. It is beyond peradventure that that has not worked, and we knew that it would not. Therefore, the claim that this removal of tax from the well-off would produce an improvement in the economy is patently untrue. Therefore, there is a good case for restoring those tax cuts. That would produce more than the £1 billion which would be raised under subsection (2).
The other alternative that I want to consider—assuming that subsection (2) is deleted, which I hope it is —relates to a rapid examination of expenditure on defence. If the Chief Secretary is right—

The First Deputy Chairman: Order. The hon. Gentleman must realise that we are dealing with the case for or against raising the class 1 contributions. It follows from that that it would not be in order to follow the line of argument that the hon. Gentleman is now following about other aspects of taxation.

Mr. Cryer: If amendment No. 5 is carried, I take it that the Government will be short of revenue. I do not think that that is a matter of controversy. I think that the Secretary of State would agree. If I am to persuade my hon. Friends to vote with me, I must convince them—because several doubters exist—that there are alternatives to which the Government could turn their attention. I know that you, Mr. Godman Irvine, would want me to be able to convince my hon. Friends on this matter.
Therefore, as an illustration, I believe that there are areas of expenditure that are non-productive—indeed, they are inflationary because they produce nothing at all —which in the current financial year have risen by 2½ per cent. In my opinion, the Government should look at defence expenditure. They should do so in order to transfer

that money to the social expenditure which the Chief Secretary says is a desirable end, although we must look at the means.

Mr. William Hamilton: My hon. Friend mentioned alternative ways of raising the money if he persuades us to support the amendment. In fact, the sums about which he is talking are almost exactly covered by the Stingray torpedo, which is currently costing about £1 billion—

The First Deputy Chairman: Order. I am not sure whether the hon. Gentleman has been in the Chamber this evening for very long, but I have tried to point out to the hon. Member for Keighley (Mr. Cryer) that alternative means of raising this money are not matters that we are discussing now.

Mr. Cryer: Surely, Mr. Godman Irvine, we must consider alternatives, otherwise the Government will be £1 billion short. One of the arguments which the Secretary of State will use is that we should not vote for amendment No. 5, unless he—I am willing to give way—accepts it. If he opposes it, it will be on the ground that it is no alternative, because he must have this revenue. Therefore, if I am to persuade my hon. Friends, I must be able to point out to them that there are alternatives. I shall not deal with the question of Stingray, although my hon. Friend the Member for Fife, Central (Mr. Hamilton) is right in saying that it is costing about £1 billion.
I turn now to a suggestion that was made by the hon. Member for Brentwood and Ongar (Mr. McCrindle) on Second Reading. I realise that I must not make a broad Second Reading speech, but we are dealing with that section on which the hon. Gentleman concentrated. He said that this was an unfair tax and that the clause was unfair and bore most heavily on those with moderate incomes. I think that the hon. Gentleman suggested a tax on banks' profits.

Mr. R. A. McCrindle: I had no intention of intervening in the hon. Gentleman's speech, but I am sure that he would not like to misrepresent me. I said that, although there was a regressive element in the proposals, on that basis alone we should not turn back from the path along which we were treading. Instead, any regressive elements could be taken care of by increased family income supplement to those who are at work as soon as there can be any increase in social expenditure. The hon. Gentleman should represent both parts of what I said.

Mr. Cryer: I do not wish to misrepresent the hon. Gentleman in any way, and, indeed, he can make his own speech. I was recalling from memory, and I think that he suggested that the regressive element in this legislation could be remedied to some extent by a tax on the windfall profits of the banks. He is at liberty to modify that and to make his peace with his Front Bench. Undoubtedly he is a man of ability, but he should not put himself too much out on a limb, because there will be a Government reshuffle shortly and I have my eye on him for consideration. Of course, I am very influential with the Leader of the Conservative Party—[Interruption.] I think that I have given the hon. Gentleman the kiss of death.
I endorse the remarks of the hon. Member for Brentwood and Ongar—

Mr. McCrindle: Which remarks?

Mr. Cryer: The remarks about the windfall tax on the banks. As I recall, the right hon. and learned Member for Hexham (Mr. Rippon) said that the only people who seem to make a profit these days are the banks. With the current high interest rates, that is right.

Mr. McCrindle: I hate to intervene yet again in the hon. Gentleman's speech, but he is deliberately taking two sections of my speech, putting them together and drawing conclusions that I did not reach. If he cares to look at the report of my Second Reading speech, in so far as I talked about the possibility of an impost on bank profits he will note that I went on to reject it.

The First Deputy Chairman: Perhaps I should also encourage the hon. Member for Brentwood and Ongar (Mr. McCrindle) to appreciate that we are not discussing the merits of alternative ways of raising the money. We must return to the amendment.

Mr. Cryer: I am grateful for your protection, Mr. Godman Irvine, from the diversions put before me, and I shall not engage the hon. Member for Brentwood and Ongar in a discussion about his speech. I do not want to misrepresent him in any way. He said on 8 December:
to raise income tax instead of charges would be preferable or, perhaps better, that they should impose a once-for-all excess levy on banking profits."—[Official Report, 8 December 1980; Vol. 995, c. 1050.]
I merely wanted to demonstrate that if we agree to amendment No. 5 and delete subsection (2), this is the way to fill the gap created by the deletion of that subsection.
The banks are making massive profits because of the Government's policy of raising interest rates to extortionate levels, and a tax on windfall profits would be one way of obtaining revenue for the social purposes to which the Chief Secretary referred and which, I have no doubt, the Secretary of State will maintain are necessary.
The Opposition believe that this is an unfair tax—and it is a tax. It will be oppressive on those who are least able to pay. We want to shift the burden on to the backs of those who are most able to bear it, and I have no doubt that both sides of the House agree that the banks are well able to pay in order to maintain social services.
The other amendments are an attempt to produce some element of fairness in a basically unfair and regressive tax position. I do not much like the Liberal amendment. It would make a slight improvement, but I should rather see subsection (2) deleted. If that happy situation were to occur, the Government would have to tell us by what means they intended to raise the money. I should welcome that, because I should like a fairer and better treatment of the ordinary working class than the Government are proposing.
I hope that I have managed to convince any of my hon. Friends who had even an iota of doubt that there are alternatives to subsection (2) and that we ought to support amendment No. 5 and delete the subsection.

Miss Jo Richardson: I appreciate the attempts of my hon. Friend the Member for Keighley (Mr. Cryer) to point to other areas where money can be raised if that must be done. I was staggered to hear that we may not discuss other projects where savings could be made. Stingray has already been mentioned, and there are other weapons and projects that could easily be cancelled. As Mr. Godman Irvine has now left the Chair, we may be able to suggest alternative savings.
This morning I went on one of my periodic visits to the River plant of the Ford Motor Company, which makes the upholstery for Ford cars. Nearly all the workers are women, and several asked me what we would be doing in the House today. I said "We shall be putting up your national insurance contributions." Such is the power of the British press that few of the women had heard much about the contribution increases. One or two had heard but could not believe that on top of all the other increases that they have had to suffer as workers, taxpayers and ordinary members of society there was to be yet another blow inflicted by a Government who are mean enough to rush it all through just before Christmas.
I asked many of the women what sort of Christmas they would have, how many children they had, whether they would be having family parties and so on. While not pleading poverty, several said that it would be a pretty hard Christmas, because they would not be able to buy as much for their kids and their homes as they had in previous years. They just do not have the money. They were appalled to find that as a result of the Bill, which is being rushed through the House with unseemly and indecent haste, they will be penalised further.
8.45 pm
The people already understand the result of the Government's actions. In almost every family in the land someone is on the dole, has to claim supplementary benefit or is in receipt of sickness, injury or invalidity benefit. All such families receive child benefit. They know how mean the Government have been in not increasing the benefits to bring them into line with inflation. I am talking about low-paid and average-paid workers. They are finding that times are hard as a result of Government action. My hon. Friend the Member for Keighley was absolutely right to suggest alternative ways of raising revenue.
Amendment No. 5 seeks to delete a whole subsection. That is our aim. However, if we cannot persuade enough Government Members to that view, perhaps they would care to examine one or two other amendments which they might find more attractive. For example, amendments Nos. 7 and 9 divide in half the 1 per cent. which is to be raised under the clause. The intention is to raise half from the employee and half from the employer. I have not heard all the speeches tonight, but some hon. Members suggest that the levy should not be put on the employer because some employers might bounce it back on to the employee or consumer. However, even that seems to be more equitable. If we cannot get rid of the provision altogether, it is better to divide it down the middle so that employees and employers make equal contributions.
Much has been said about low-paid workers—women and part-time workers in particular. I represent a solidly working-class constituency where, traditionally, women go out to work because money is needed to supplement the family income. In most cases women do not go out to work because they want a career, although some do. Some of the work that they do is poorly paid and boring. Mostly it is not work that they would choose to do, but they have to do it because they need the money.
These are the kind of women that I have talked to, as I am sure have other Members in their constituencies, on council estates in particular, who are the first to be driven to the wall, losing their jobs or having to give up their jobs as a result of some of the actions of this Government. Hon. Members cannot fail to realise that some of the overall


public expenditure cuts which have been made—for example, in charges for home helps and the cuts in the home help service, the closing, or the non-opening, of old peoples' homes and the fact that school meals provision is not as it used to be—have placed an extra burden on the woman of the family. In some cases, she has had to give up her job to look after children or elderly or sick relatives and is not able to carry on working, even though there may be a job for her.
The Government have not given sufficiently careful consideration to the effects of their policies, including the policy that we are debating tonight, on married women and those who are in poorly paid and part-time jobs. I hope, therefore, that we shall consider, as an alternative to the amendment, to delete the subsection, amendments Nos. 7 and 9. I hope that we shall have a vote on amendment No. 9, assuming that the principal amendment, No. 5, is not carried. I hope that the Committee will support me in amendment No. 9 as an alternative to what has been proposed.

Mr. Dobson: The nub of the clause lies in the rather remarkable statement made by the Chancellor of the Exchequer on 24 November, in which he said:
it is right that those who remain in employment should be invited to be in a percentage of that cost by the increase that I have described in national insurance contributions.
If amendment No. 5 is not passed, we shall be turning the Chancellor's invitation into a godfather-type invitation which people cannot refuse because it will be the law of the land. That is a curious form of invitation, the sort of invitation which this Government seem to issue to everyone where money is concerned—that is, apart from their rich friends.
In considering what the Secretary of State said about his taxation and benefits policy. I shall refer—unlike my hon. Friend the Member for Keighley (Mr. Cryer), I do not rely on what some Government Members regard as hearsay evidence of a reputable journalist when listening to a wet blue moan in the Lobby—to a piece of wet blue paper issued by the news service of the Conservative Central Office concerning the speech which the Secretary of State made to the Canton Conservative Club. For the uninitiated I should explain that Canton turns out to be not in China but in Cardiff. He said on that occasion, and I must admit that it is pretty true, even with the media not on our side:
It is easy for the Socialists to accuse us of cutting back on welfare in order to finance tax handouts for the better-off.
He is absolutely right. It is easy for us to do that, because it is true and the most powerful forms of propaganda are always those which are true. For once in a while, the Secretary of State made an accurate statement in his speeches around the country. Having looked at many of the right hon. Gentleman's speeches in the past two hours, I think that that phrase stands out as the one that is probably the most accurate of all those that we could quote.
I turn to the matters that my hon. Friend the Member for Birkenhead (Mr. Field) referred to, particularly in relation to those members of our poorer community who rely on family income supplement. As I explained earlier, I have a very simple view of these matters, because I do not have the expertise of many of my hon. Friends. I understood that my hon. Friend was talking about FIS to the value of £2·17 disappearing from many of those who can presently draw it, disappearing entirely as a result of the Bill. That would be a severe blow.

Mr. Patrick Jenkin: Mr. Patrick Jenkin rose—

Mr. Dobson: I shall permit the right hon. Gentleman to demonstrate his expertise.

Mr. Jenkin: I hope to enable the hon. Gentleman to avoid falling into the error that his hon. Friend the Member for Birkenhead (Mr. Field) fell into. Anybody on £28 a week pays 28p more—not £2·17—as a result of the clause.

Mr. Dobson: Perhaps my hon. Friend can help me.

Mr. Field: I am grateful to my hon. Friend for giving way so that I can put the argument a little more clearly. We were talking generally about low-paid workers. I was saying that I was sad that I had not received a reply in the debate on the first set of amendments. I was amazed that the Under-Secretary defended the increase in the national insurance contribution of low-paid workers generally by saying that we must not worry too much, because they would pick up FIS. My point was that many of them would have the whole of their FIS given by the DHSS and then taken back by the Inland Revenue. I hoped that the Secretary of State would tell us how many workers would, in effect, have the whole of their FIS payment cancelled out as a result of the clause. Perhaps when the right hon. Gentleman next intervenes he will give us that valuable information.

Mr. Dobson: I think that when the Secretary of State gave the figure 28 he meant 28p and not the number of people who were being taken out of ITS. Apparently his officials, those whom he accused in his election manifesto of not understanding the system, do not understand it well enough to have been able to give him the necessary advice since my hon. Friend raised the point originally.
According to the latest figures provided by the Department, figures which I believe are as recent as 1975, the take-up of FIS is roughly only 75 per cent. of those eligible. I also understand from the Department that it is believed that the bulk of those who do not draw it would not be entitled to a great deal. It seems to follow from my hon. Friend's point that a substantial number of people not drawing FIS would be taken out of eligibility for it by the methods that we are talking about.
We all know that one of the reasons for the 1 per cent. increase is the substantial increase in unemployment. I seem to be following my hon. Friend rather closely tonight. He has already spoken of the exaggerated impact of unemployment on women. They have suffered disproportionately because there has been a disproportionate shedding of labour among people who are only in part-time employment. Women tend to be more often in part-time employment than men. Consequently, they have suffered considerably more as a result of the Government's other measures that have led to increased unemployment. Unless the Government accept amendment No. 5, a disproportionate share of the burden of paying for unemployment will fall upon the shoulders of women in part-time employment who are at the nodule point of the impact of these benefits. Once again, women will suffer more—I refer to those in employment, especially in part-time employment—as a result of the Government's policies.
9 pm
It was stated in the Conservative Party's manifesto that a Conservative Government would "tackle" the poverty


trap. There may be numerous interpretations of the word "tackle". There is the tackle by a Third Division North half-back that is intended to knock the knees—

Mr. Race: My hon. Friend is showing his age.

Mr. Dobson: Was that interpretation intended by those who wrote the Conservative Party manifesto? I spoke of the half-back tackling a forward. That example applied to whatever Division One wanted to choose, whether it exists these days or whether it does not. The Bill will help pick up the forward in the role of the poverty trap. It will do nothing to harm the poverty trap. It is not tackling it at all but increasing it. That is another good reason for supporting the amendment to delete the proposed increase. That increase, taken with the other measures in the Bill, is bound to accentuate the poverty trap, especially for women who are in part-time employment or who have passed out of that employment as a result of the Government's policies.
One of the problems is that those who occupy the Treasury Bench have little knowledge of the poverty trap except at a theoretical level. They see their problems as having to deal with the wealth trap. We have had the Treasury Bench graced with a member of the Government whose main reputation was gained outside the House. He is now dependent on his ability to alleviate the wealth trap to the tune of £1,000 million, which is equivalent to the amount to be raised—

The Second Deputy Chairman (Mr. Richard Crawshaw): Order. The hon. Gentleman is padding everything out to such an extent that we are missing the point that he is trying to make. I ask him to come to the point. What he was saying was not relevant to the issue that we are discussing.

Mr. Dobson: I stand corrected, Mr. Crawshaw. I felt that to refer to another method of raising £1,000 million, which is equivalent to the amount to be raised—

The Second Deputy Chairman: Order. My predecessor in the Chair made it clear that to put forward alternative methods of raising £1,000 million is not relevant to the issue before the Committee. If the amendment is carried, it will be for the Government to decide how they will raise the money. It is not for Opposition Members to suggest where the money should come from. I hope that the hon. Gentleman will speak to the amendment.

Mr. Cryer: Further to that point of order, Mr. Crawshaw. Your predecessor in the Chair raised this point when I was addressing the Committee. If we are to persuade enough hon. Members to vote for the amendment when the Committee divides, we shall have to convince them that there are sound alternatives if the amendment is carried. Surely we are debating whether the amendment should be carried. The arguments for that proposition depend on whether hon. Members regard it as a credible amendment, and that depends on providing the money.

The Second Deputy Chairman: It is perfectly in order for hon. Members to state that money can be raised by cutting the defence budget, but not for them to go into the details of raising the money. Such suggestions may be

made only in passing. We are not debating defence. The Government will decide where the money will come from if the amendment is carried.

Mr. William Hamilton: Further to that point of order, Mr. Crawshaw. May I make a tentative suggestion? My hon. Friend the Member for Keighley (Mr. Cryer) attempted to get our support for the amendment by stating with considerable conviction how the sum of money that will be lost to the Government if the amendment is carried can be raised. The Minister will have costed the amendment and in his reply will state that, if accepted, it will cost £X million and that we have not suggested where the Government can find that sum. We are trying to save the time of the House by suggesting alternatives. I have proposals that I hope to put before the House on alternative ways of raising that money. The job of a responsible Opposition is to suggest alternative ways of raising revenue. It is a relevant part of the debate.

The Second Deputy Chairman: As I have indicated, it is perfectly in order for an hon. Member to make a passing reference to a specific item, such as a cut in housing or defence expenditure. However, the proposal that the hon. Member for Holborn and St. Pancras, South (Mr. Dobson) wishes to make is a matter of argument. We are not discussing defence or housing. Hon. Members must make only passing reference to subjects outside the debate. I do not intend to let hon. Members go into detail; they can make only passing reference to such items.

Mr. Dobson: I should hate to be diverted into a series of passing references to anything. I shall, therefore, deal with one consequence that will result if the Committee does not pass the amendment. I address my remarks more to Conservative Members than to my hon. Friends. My remarks have nothing to do with alternative means of raising the £1,000 million that the Government seek to raise by the 1 per cent. increase. I shall point out an inevitable consequence for the Government's economic policies and the general state of the economy if the amendment is not passed.
The Government are in a trap. To date, according to official Government figures, price inflation has been a bit lower or about the same as the level of wage increases. If, however, as a result of the Government's policy, wage increases are kept roughly to the Government's target of 6 per cent. but inflation is not brought down to the same level, the impact on the people will be much greater than merely the official figures. Whatever the official figures, the disparity between pay increases and price increases will grow. The perceived rate of inflation will also increase. The Government would therefore be unwise, even within their own philosophy, to impose an additional £1,000 million tax on people in employment, when they should be seeking to keep to the minimum the perceived rate of inflation. If the Government impose the increase, they will raise the perceived rate of inflation at the very time when they should be doing all in their power to lower it.
This measure is unfair in that it imposes a burden on those least able to bear it. It imposes a particularly harsh burden on women, because they constitute a disproportionately high proportion of those in part-time employment, the people whom the Bill will hit hardest. It shows a failure of the Government's policies because it will accelerate the perceived rate of inflation. The


Government have available to them a host of other measures to raise the £1,000 million, including, if I may mention them in passing, some substantial cuts in the wasteful defence expenditure upon which they are now embarking.

Mr. William Hamilton: When the Bill was first published, based as it was on the Chancellor of the Exchequer's statement, a number of commentators, hardly any of whom were sympathisers with my party, said that the increased contributions were the Government's admission of defeat for their policies. The fairest and most just course for the Government would have been to announce that they were increasing taxation. Their election manifesto commitment precluded that, however, and since the manifesto contained no comparable commitment about national insurance contributions they saw it as a convenient way of balancing the books.
Although it gets them out of difficulty, it does so at the expense of social justice. The lower-paid will suffer most. Generally, part-time women workers will have to pay between £2 and £2·25 national insurance contribution out of wages of £27 or £29 a week.
That is a curious comment on the Government's first Budget, of June 1979. Its clear objective was to remove the disincentive effect of heavy taxation on earnings at lower and middle levels and to strengthen financial incentives by allowing people to keep more of what they earned. It was to cut the marginal rate of tax on overtime and so on. That, at least, was the official reason given in the Budget snapshot produced by the Treasury on 12 June 1979.
The proposal to increase the national insurance contributions of those at the low end of the incomes scale runs counter to all that. The hon. Member for Harrogate (Mr. Banks) has said repeatedly that, far from giving those people incentives, the proposal is the grossest disincentive, the grossest attack and the grossest example of social injustice. He said that the only people who were doing well out of the Government were the bankers and the moneylenders. I shall add the brewers also.
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Our charge is the sheer social injustice of the measure and the complete negation of incentives to people who desperately need some help, if not incentives.

Mr. Field: Has my hon. Friend seen the document that the Low Pay Unit has distributed to some hon Members, in which it makes a valid point? It compares workers with income ranges from £40 to £500 per week and the marginal rates of tax—

Mr. Hamilton: I was coming to that.

Mr. Field: Then I shall not continue.

Mr. Hamilton: I was about to mention that document. The Low Pay Unit points out that the marginal rates of tax at selected income levels show the gross disincentive under these and related proposals that have been put forward by the Government since they were elected. The document gives a table showing that by April 1981 workers earning the equivalent of £40 per week at 1979 prices will keep only 62·25p of every additional £1, compared with 68·5p before the June 1979 Budget. The Budget reduced their income by more than somewhat.

Those earning £500 per week—not £40 per week—will keep 40p out of every additional £1, compared with 17p that they would have kept prior to last year's Budget.
The document states:
Thus while the majority of workers have seen their marginal tax rate reduced by up to 20 per cent. by this Government, an estimated 50,000 workers have had theirs increased by 6¼ per cent.
Those are the facts as produced by a reputable outside body.
The obvious intention of this pan of the Bill is to transfer burdens from the Treasury, and, therefore, from the generality of taxpayers, to the national insurance contributors. Generally speaking, an unfair proportion of those increased national insurance contributions will be paid by the low-paid sections of our community. The most regressive provision in the Bill is the reduction of the Treasury supplement from 18 percent. of contributions to 14·5 per cent.—a drastic reduction in the commitment of the taxpayer to the national insurance fund.
The increase in contribution rates over and above that required by the Government Actuary is to finance the cut in the contribution made by general taxation to the rational insurance fund. The Government Actuary's report on the Bill notes that an extra £529 million will have to be raised in contribution income to make up for the cut in the Treasury supplement. That is not coincidental. It is a deliberate part of Government policy to switch the burdens—not only in the national insurance area but in other areas—of social benefits, whether they be housing subsidies or anything else, away from the generality of taxpayers to others who are least able to bear them.
We are moving further away—and the amendment and those linked with it are moving further away—from the original concept of financing the national insurance fund on a tripartite basis. I refer to the Beveridge report, produced 30 years ago. The forecast then was that by 1965—15 years ago—the Treasury would be contributing about 46 per cent. of the total charges on the fund and that that proportion would in all probability increase. Instead of that happening, the Government are reducing the proportion to 14·5 per cent.

The Second Deputy Chairman: ; Order. The hon. Gentleman is making a valid point, but I think that it is more relevant to amendment No. 17 than to the amendment that we are discussing.

Mr. Andrew F. Bennett: On a point of order, Mr. Crawshaw. Since we are being asked in this group of amendments to deal with ½ per cent., which was necessary only because of the National Health Service changes, surely it must be relevant to the amendment that we are discussing as well as to amendment No. 17.

The Second Deputy Chairman: The hon. Gentleman has misunderstood me. It is relevant, and I made that clear. I do not think that it should be gone into in detail. A passing reference can be made to it. It can be debated later.

Mr. Hamilton: I shall bring my remarks to an end in view of what you have said, Mr. Crawshaw, except that it will lengthen the proceedings later on. But if it will be more in order on a later amendment I shall be happy to deal with it then.

Mr. Field: My hon. Friend mentioned the Beveridge report. There was no clear statement on how much the Exchequer contribution should be over the years. That was


shown in the White Paper produced by the Coalition Government in 1944. There the figures are quite different from those in the note with which we have been provided as a brief. I mention it only because it strengthens my hon. Friend's argument. The then Government estimated that the contribution from the Exchequer would be towards the 70 per cent. level by 1965.

Mr. Hamilton: My hon. Friend's point strengthens the case that I am making. The Government are moving in a different direction, because they are in the active process of dismantling the Welfare State. That is what they are doing, whether it is in relation to national insurance, the National Health Service or whatever it may be.
The Library brief on these matters includes a table deriving from the social security statistics for 1975, showing the Exchequer contribution as a percentage of total contributions excluding contributions to the National Health Service where appropriate. It shows the percentage Treasury supplement as 16·7 percent. in 1975, compared with 38·7 percent. in 1951.
The point that my hon. Friend the Member for Birkenhead (Mr. Field) was making is worth repeating. The Government are pursuing a deliberate policy, which is hidden a little in the technical detail of the Bill. It is a deliberate shift of burdens. We are moving from a relatively fair and progressive system of taxation to a most regressive and socially unfair system of flat-rate contributions under the national insurance scheme. That is the main charge against the Government. In addition, it accentuates the problems of the poverty trap.
When the Conservatives were in Opposition, they—not least the Secretary of State and his underling, the Under-secretary—were eloquent about the evils of the poverty trap. They are now hell-bent on making it worse. That is most reprehensible. During a recent debate in another part of the building, one of our colleagues said that he was sick and tired of hearing Tories saying one thing in Opposition and another when they were on the Treasury Bench. That is what the Government are doing tonight, and that is why we strongly object to the Bill.

Mr. Andrew F. Bennett: Like my colleagues, I find this clause to be one of the most obnoxious in the Bill. The Conservative Party has been trying to trick the country out of a proper debate. The Government have insisted on slipping through a tax measure to raise an extra £1 billion. This measure is designed to discourage debate outside the House and designed to discourage people from finding out what is happening. If the Government had introduced this measure in a Finance Bill, in the normal way, we should have had a period of three or four months for people to appreciate the measure and to make representations.
The Government intend the Bill to be enacted and to increase people's stoppages next April. They do not want people to know why that is happening. That is objectionable. The Government should have the honesty to tell people that they do not want to increase income tax, because that would be a U-turn. They should say that they are doing the same thing in a more regressive way, by increasing national insurance contributions. It would have been fair if the Government had said that and had then received the country's support. It is particularly objectionable that the Government should try to sneak this measure through in such a way.
It is a pretence to say that the measure involves national insurance, because no one will derive any benefit. If the Secretary of State can show me one benefit, I shall take back some of my words. There are cuts in every area. Pensions are being cut in real terms. Sickness benefit, unemployment benefit and industrial injury benefit are being cut in real terms. Even the Health Service has, in effect, been cut, because of the imposition of VAT. In all those areas for which people pay their contributions, there are cuts. They are being asked to pay more and to accept less. This is clearly a taxation measure that has nothing to do with national insurance.
The Minister keeps insisting that the Bill must be rushed through before Christmas so that it can take effect from 6 April. However, the other fiscal measures will be announced in the Budget. We are being given only one measure and we cannot look at a package and a total effect. Why does not the Secretary of State introduce proposals to change personal tax allowances now? New tax tables could then be available from 6 April. That would be logical. However, the right hon. Gentleman seems to think that it is perfectly all right for those measures to be considered in the summer. Perhaps he will not change personal allowances this year.
The Treasury does not intend to bring forward a measure for personal tax allowances this year. Does it intend to have the money and then, perhaps, to pay it back in the form of a refund later in the year? There is no logic in that. What about family income supplement? We have argued strongly about the low-paid. What are the Minister's proposals for FIS next year? That might give us some idea of the impact on the low-paid. Again, he wants to keep that information back. He is not prepared to give us a total package as regards the financial position next April. Some will find that their stoppages will increase in April as a result of this measure and will possibly go down later in the year because the Government will be trying to claim some credit for changing the personal tax allowances.
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The Liberal Party was challenged to propose something that was fairer than a lump sum, but the attempt that is made in amendment No. 6 is somewhat feeble. The hon. Member for Colne Valley (Mr. Wainwright) talked about the poverty plateau rather than the poverty trap. I suggest that the amendment would put into the plateau only one small peak. It would not do much to solve the problem of how to change from a regressive to a reasonably progressive tax.
I hope that a separate vote will be allowed on amendments Nos. 7 and 9 because they deal with a different principle. We are reluctant to concede that the Government need to raise the extra £1 billion. However, if they are to raise it, we would argue that it should be done in a fairer way by sharing the burden between the employer and the employee.
I accept that there are some problems. I do not believe that the imposition of this tax can be see in terms of half going one way and half the other. It depends entirely on bargaining power, labour relations and the employment situation how the money is split between the employer and the employee. However, it still seems fairer to split it in that way.
The Government claimed that they were determined to help the employer and were not putting up his costs. Then it came out that they were putting up his costs considerably.
I suggest that the Minister could accept the amendment and split the increase between the employer and the employee without doing any harm to the employer if he considered the real problems facing the employer—high interest rates and the exchange rate. If he could persuade the Treasury to bring down either of those by a small percentage, most employers would happily pay their extra national insurance contribution. That would be of more help to them than holding off their increase.
Will the Minister say whether the ¼ per cent. is required 1 or the increased numbers of unemployed or for the extra numbers qualifying for pennon payments? I suggest that it is wrong to raise extra money to pay the unemployed. The emphasis should be on reducing the level of unemployment. The most depressing part of the Government Actuary's report on the extra ¼ percent. is the Government's acceptance that the average level of unemployment next year will be 2,300,000. If the Government could solve that problem, there would be no need for the ¼ per cent.
I hope that the Committee will support amendment No. 5 to leave out subsection (2) Failing that, I hope that we shall be allowed to express oar preference for amendments Nos. 7 and 9.

Mr. Patrick Jenkin: It is almost three hours since the hon. Member for Birmingham, Perry Barr (Mr. Rooker) moved amendment No. 5, which seeks to delete subsection (2), which he rightly described as the heart of the Bill and which would raise £1,000 million extra in national insurance contributions. I make no complaint that hon. Members have addressed themselves at length to the issues posed by subsection (2), and I shall do my best, I hope at not too great length to respond to the points that have been made.
The hon. Member for Perry Bar, who was echoed by the hon. Member for Stockport, North (Mr. Bennett), asked why we had to have the Bill now. The hon. Member for Stockport, North asked why whatever tax changes my light hon. and learned Friend the Chancellor of the Exchequer may have in mind for the Budget should not be made known so that the tax tables may be issued or, alternatively, why this decision could not be put in the context of the Budget and dealt with at the same time.
The answer really lies in the practicalities of the rational insurance contributions. I shall explain in a moment why the Government thought that this was the sensible way to proceed in the position in which we find ourselves.
The difference between tax and national insurance contributions, purely as a matter of machinery, is that PAYE is cumulative and national insurance contributions are not. With PAYE, one can announce the rates in the Budget and issue the tables later in the year, perhaps about June—the hon. Member for Colne Valley (Mr. Wainwright), as a member of the accountancy profession, understands these things extremely well—and then catch up with the wrong payments that have been made in the first two or three months of the financial year, because PAYE operates cumulatively.
One cannot do that with national insurance. The tables issued to employers for national insurance purposes must

be issued in time to allow them to make the necessary changes in their pay arrangements, whether on computers or otherwise. We therefore have to issue those by the beginning of February so that the new rates of national insurance contributions can be deductable from 6 April. That is the mechanical reason why we have to do this.
It was for exactly the same reason that the Labour Government, when they introduced the National Insurance Surcharge Act in 1976, had to proceed on almost exactly the same timetable—including, incidentally, taking that Bill through Parliament in the space of a very few weeks. That is why we have to do this, and that is why we must pass the Bill.
I turn to the reason why we wish to add one percentage point to the national insurance contribution of employees. The House will remember, as this was discussed at some length on Second Reading, that one-quarter of that is to provide money for the National Health Service and thus to enable the Government to maintain the growth in spending on the National Health Service to which we committed ourselves in our election manifesto.
A further ¼ per cent. is necessary to maintain the flow of funds to the national insurance fund, to meet the expected demand on that fund in the course of the next year. The reasons for that are spelt out in the Government Actuary's report published with the Bill.
The third element, which aroused the indignation of the hon. Member for Fife, Central (Mr. Hamilton), and to which, no doubt, we shall return on clause 2, is a further ½ per cent. to allow for the reduction in the Treasury supplement, which, as my right hon. Friend the Chief Secretary said on Second Reading, makes a direct contribution to the reduction of the public sector borrowing requirement.
It would not be light for me on this amendment to go into the economic arguments for the essential policy of containing the size of the public sector borrowing requirement. But no one has sought to deny that the case for raising extra money in this way, to allow the public sector borrowing requirement to be reduced, was made absolutely clear from the start—from the moment that my right hon. and learned Friend the Chancellor announced this—and it is at the heart of the Government's economic policy.
The hon. Member for Perry Barr and a number of his hon. Friends asked why we must put this wholly on the employee and why it has not been shared, as perhaps in other circumstances it might have been, between employer and employee. It is fair to say that in the early days of the national insurance scheme employers' and employees' contributions were much the same and moved broadly in parallel. In recent years, even leaving aside the national insurance surcharge, the employers' contribution has moved up and is now more than 10 per cent., whereas the employees' contribution was 6¾ per cent., now rising to 7¾ per cent. as a result of the Bill.
The Bill, to a modest extent, narrows the differential. But the real reason why we decided to make this impost on the employee and not on the employer is that the pattern and movement of the factors in the economy, particularly the high interest rates and the high exchange rates that have been referred to in the debate, press very much more hardly on employers than on employees. Standards of living over the last 12 months have on average risen quite significantly across the country. The increase in earnings has been four or five points higher than the increase in


prices. In those circumstances, it seemed to the Government fair and right that the extra contribution should be paid by employees and others in work, such as the self-employed.
I listened with great interest to the point made by the hon. Member for Birkenhead (Mr. Field), who courageously took issue with his hon. Friends who argued in favour of splitting the contribution half and half between employers and employees. The hon. Gentleman agreed with my hon. Friend the Member for Anglesey (Mr. Best), who argued for the burden being placed on employees. Before the hon. Member for Birkenhead gets to his feet, let me add that I appreciate that he said this was right provided that the base was altered. The base is settled by the pattern of the 1975 Act, and that base is not being altered in the Bill. However, he accepted the case that those in work should now bear the extra burden of financing the benefits for those not in work, whether they are old, unemployed or whatever.
I take profound issue with the hon. Member for Wood Green (Mr. Race), who said that this would have as much effect on employment as it would if we put the burden on employers. With great respect, that simply does not make economic sense. If we put extra burdens on the employers in the present circumstances, they would have an immediate effect on the level of employment. The hon. Member for Birkenhead certainly accepted that case. At a time when price margins are being squeezed, and when prices in the high streets show that competition is extremely fierce—one can see that in the sales that take place week after week and month after month—there is no possibility whatever of placing the burden on employers. The hon. Member for Wood Green is living in cloud-cuckoo-land—the hon. Member for Barking (Miss Richardson) made the same point—if he believes that if the impost is put on employers they will simply pass it on in higher prices. That would put their profit margins under still tighter pressure and lead inevitably to more people being laid off. For that reason, we felt that it would be wrong to put any part of this additional national insurance increase on to employers.

Mr. Ioan Evans: The Government have claimed that they have reduced taxes. In fact, in the first Budget that they brought before the House they reduced taxes for the wealthy. They have also imposed VAT on working people. Although working people have been told that there have been tax reductions, they will find a reduction in their take-home pay as a result of this increase in national insurance contributions, and that will lead to a feeling of injustice. Does not the right hon. Gentleman agree that when the tax and prices index which is issued by the Government shows the increase to be above 16 per cent., it will encourage workers to claim higher pay increases?

Mr. Jenkin: I do not disagree with the hon. Gentleman. It may well be that unions will seek to use this as an argument in their negotiations for higher pay. However, in the mood of realism which is now dominating the pay scene in this country—where the question of how much extra pay private and public sector employers can afford is the determining factor—my guess is that this will have no significant impact on the level of pay increases that will be awarded.

Mr. Race: The Secretary of State said that I had been living in cloud-cuckoo-land. Who is living in cloud-cuckoo-land? His Government have screwed employers' profit margins. His Government have undermined their profits. We are arguing for equity and fairness in the national insurance system. If he is so concerned about the plight of employers, let him change the overall economic policy and stance of the Government and stop messing about and accusing us of attacking the employers.

Mr. Jenkin: That is a totally different tune from the tune that the hon. Gentleman sang during his speech an hour and a half ago, when he argued that if we put half the extra charge on to employers it would not fall on employers but would be passed on and that they could afford to do that. The hon. Gentleman must make his arguments a little more logical.

Mr. Field: May we return to the point that there could be a case for putting this increased charge on employees, if only the base could be changed? We have again heard from the Government that it could be changed but for the 1975 Act. Clearly, that Act came down Mount Sinai on tablets of stone, to be unchanged in any way. Will the Secretary of State tell the Committee what there is in the 1975 Act that would prevent people earning below £27, £28 or £29 a week from paying 1 or 2 per cent. of their-wages in contributions, and allowing—as the Liberal amendment suggests—a graduation up the income scale?

Mr. Jenkin: I shall deal with the Liberal amendment in a moment. I think the hon. Gentleman recognises the understanding that was reached in 1975 between the pension interests and the private sector. I should not use the phrase "private sector", because more public sector pension schemes are contracted out than private sector schemes. About 10 million employees are in pension schemes that have been contracted out on the basis of the structure that was agreed in the 1975 Act. The basis of that was a whole range of—

Mrs. Kellett-Bowan: Relativities.

Mr. Jenkin: I am grateful to my hon. Friend—between the contributions for contracted-in and contracted-out schemes, for the protections and limitations of the rights for transferred benefits, and a whole range of matters. That was a carefully constructed package that was felt by both sides of the House at the time to be fair to the occupational pension schemes and fair to the national insurance scheme. It has been the passionate desire of all those concerned with the pensions world outside the House that that carefully constructed package should not be upset.

Mr. Ennals: Mr. Ennals rose—

Mr. Jenkin: I know what the right hon. Gentleman is going to say, but if he consults them he will find that nothing that the Government have done or are proposing to do will in any way upset the essence of that package.

Mr. Ennals: Mr. Ennals rose—

Mr. Jenkin: With great respect, whether it is a question of the index-linking of benefits or taking the margins between the upper and lower earnings limits, we are acting entirely within the spirit of that concordat. Some of the changes that have been proposed, particularly in


amendment No. 6—the Liberal amendment—upset that package. They are unacceptable to us and would be totally unacceptable to the pensions interests outside the House.

Mr. Ennals: Surely, all the Secretary of State's arguments are in favour of taking extra money by taxation rather than mucking around with the national insurance system.

Mr. Jenkin: That may be argued on another occasion. I am arguing for doing with the national insurance fund what is proposed in the Bill.
The hon. Member for Perry Barr asked what had happened to the £121 million charges foreshadowed in Last year's public expenditure White Paper. Those charges have not been made, and ¼ per cent. of the increased contribution is required for making up the loss of revenue. Of the total, £100 million relates to England and, of that, £14 million relates to the income from sight tests. The Committee will remember Mat we dropped that proposal in response to objections from hon. Members.
The remainder relates to other charging proposals that have been abandoned or modified, such as that for further measures to recover the cost to the NHS of treating road accident victims. We still hope to bring forward shortly proposals for recovering more of the cost of the use of the NHS by foreign visitors. We shall be announcing details in due course. Much the largest item was the road accident proposal, for which no practical scheme has emerged.
The Liberal amendment would result in a loss to the national insurance fund of £613 million. The hon. Member for Colne Valley said blithely that that would run the fund into deficit. So it ruddy well would.

Mr. Field: Language!

Mr. Jenkin: The hon. Member for Colne Valley asked what was the matter with a deficit, since in 1977 the then Government planned for a deficit. I have looked up the planned deficit in 1977. Far from being £613 million, it was £25 million. For the hon. Gentleman to use that as an argument for cheerfully accepting a planned deficit of more than £600 million is exceeding the normal irresponsibility that we expect from the Liberal Party.

Mr. Richard Wainwright: Despite the Secretary of State's excitable and lurid language, which almost rivals that of the Chief Secretary, who was rebuked by the Chair for swearing at Question Time, he ought to be fair to the Committee and give us details of the accumulated surplus in the national insurance fund this year and in 1977.

Mr. Jenkin: The important point about the accumulated surplus is that as a proportion of the outgo—which is the key ratio—it has been steadily declining year by year. The figures are given in paragraph 16 of the Government Actuary's report. In 1979–80 the proportion was 36 per cent., in 1980–81 it is 34 per cent. and in 1981–82 it will be down to 30 per cent. Even with the modest surplus of £39 million for 1981–82 that our proposals will produce, the accumulated surplus represents only about four months' outgo.

Mr. Wainwright: It is more than £4 billion.

Mr. Jenkin: Yes, but that is only about four months' outgo. As someone said, "There ain't no fund." It is a working balance, and it is absurd for the hon. Gentleman to suggest that we should cheerfully plan for a massive deficit.
I will not go into the obvious practical difficulties of adding yet another rate of contribution, which the amendment would involve. It would massively complicate the work not only of my Department but of every employer in the land. They would need three rates for their employees. The task of checking that and ensuring accuracy would be massive. I cannot advise the Committee to accept the amendment.
We shall come to the question of the Treasury supplement when we discuss the next clause. There is nothing sacrosanct about the size of the Treasury supplement. It has changed over the years. It has been over 34 per cent. and below 12 per cent. It has fluctuated between 15 per cent. and 20 per cent in the last six or seven years. We are spending billions of pounds more on non-contributory benefits, and the general taxpayer is thus making a bigger contribution to social welfare payments. It is, therefore, not unreasonable, when trying to reduce the public sector borrowing requirement, to shift an, additional part of the burden of financing the national insurance fund to the contributors and off the general body of taxpayers, and thus off borrowing.

Mr. Field: But they are taxpayers.

Mr. Jenkin: With respect, I am speaking of the general level of public sector borrowing.
The right hon. Member for Norwich, North (Mr. Ennals) will remember that the Select Committee criticised me in the summer because the changes made in the Social Security (No. 2) Act for reducing benefits in the next year or two did not affect the public sector borrowing requirement to the full amount of the cuts. We answered that argument by saying that it would depend on what happened to the contribution rates in November 1981. The right hon. Gentleman cannot complain if, in order that the changes in the national insurance fund feed through directly to the public sector borrowing requirement, a reduction is made in the Treasury supplement.
The right hon. Member for Norwich, North also argued that the increase for the National Health Service would not give rise to extra spending on the service. That comes rich from the Minister who presided over cuts of one-third in the total capital expenditure on the Health Service rather than move an inch on charges. We have said that we shall preserve entirely intact the growth of the National Health Service. We are right to ask the House and the country to pay a little more for it.

Mr. Ennals: The Secretary of State has criticised me, and I must reply. He knows that when I was Secretary of State the general growth of revenue and capital in the National Health Service was faster than it has been since the present Government came to power There is no point in touching only upon capital and leaving revenue aside.

Mr. Jenkin: The right hon. Gentleman cannot escape the fact that, rather than impose extra contributions and higher charges, he preferred to cut the programme. We do not do that.
I have the impression that the Committee is anxious to reach a conclusion. The changes that we are making in the clause—which is at the heart of the Bill, as the hon. Member for Perry Barr said—are realistic in the financial and economic circumstances. They are fair between different categories of our citizens. They put the burden upon people in work in order to preserve benefits


for people who are not in work and in order to preserve the Health Service. The changes are sufficient and necessary, in part to maintain the solvency of the national insurance fund.
Amendment No. 5, which would delete the subsection, amendment No. 6, the Liberal Party's elaborate and not very sensible plan, and amendments Nos. 7 and 9, which would shift part of the burden on to employers, are contrary to the best interests of the national insurance fund, the Health Service and the economy. Therefore, I cannot advise the Committee to accept them.

Mr. Buchan: Perhaps the saddest aspect of tonight is the petty meanness of the Government's action. They face the biggest economic crisis for half a century, and what do they do? They take half of 1 per cent. from the workers alone; there is no half of 1 per cent. from the employers. They remove £1 billion from the workers' pockets to pay for the crisis that they themselves have caused.
The measures that the Government are taking are exacerbating the crisis. They found a short-term crisis—

It being Ten o'clock, THE CHAIRMAN left the Chair to report Progress and ask leave to sit again.

Committee report Progress.

BUSINESS OF THE HOUSE

Motion made, and Question put,
That, at this clay's sitting, the Social Security (Contributions) Bill may be proceeded with, though opposed, until any hour.—[Lord James Douglas-Hamilton.]

The House divided: Ayes 293. Noes 203.

Division No. 18]
[10.00 pm


AYES


Abse, Leo
Buchanan-Smith, Hon Alick


Aitken, Jonathan
Buck, Antony


Alexander, Richard
Budgen, Nick


Amery, Rt Hon Julian
Burden, Sir Frederick


Ancram, Michael
Butcher, John


Arnold, Tom
Butler, Hon Adam


Aspinwall, Jack
Cadbury, Jocelyn


Atkins, Robert (Preston N)
Carlisle, John (Luton West)


Atkinson, David (B'm'th,E)
Carlisle, Kenneth (Lincoln)


Baker, Kenneth (St.M'bone)
Carlisle, Rt Hon M. (R'c'n )


Baker, Nicholas (N Dorset)
Chalker, Mrs. Lynda


Banks, Robert
Channon, Rt. Hon. Paul


Bell, Sir Ronald
Chapman, Sydney


Bendall, Vivian
Churchill, W. S.


Benyon, Thomas (A'don)
Clark, Hon A. (Plym'th, S'n)


Benyon, W. (Buckingham)
Clark, Sir W. (Croydon S)


Best, Keith
Clarke, Kenneth (Rushcliffe)


Bevan, David Gilroy
Clegg, Sir Walter


Biffen, Rt Hon John
Cockeram, Eric


Biggs-Davison, John
Colvin, Michael


Blackburn, John
Cope, John


Blaker, Peter
Cormack, Patrick


Body, Richard
Corrie, John


Bonsor, Sir Nicholas
Costain, Sir Albert


Boscawen, Hon Robert
Cranborne, Viscount


Bottomley, Peter (W'wich W)
Critchley, Julian


Bowden, Andrew
Crouch, David


Braine, Sir Bernard
Dean, Paul (North Somerset)


Bright, Graham
Dickens, Geoffrey


Brinton, Tim
Dorrell, Stephen


Brittan, Leon
Douglas-Hamilton, Lord J.


Brocklebank-Fowler, C.
du Cann, Rt Hon Edward


Brooke, Hon Peter
Dunn, Robert (Dartford)


Brotherton, Michael
Durant, Tony


Brown, M.(Brigg and Scun)
Dykes, Hugh


Browne, John (Winchester)
Eden, Rt Hon Sir John


Bruce-Gardyne, John
Eggar, Tim


Bryan, Sir Paul
Elliott, Sir William





Emery, Peter
Lyell, Nicholas


Eyre, Reginald
McCrindle, Robert


Fairbairn, Nicholas
Macfarlane, Neil


Faith, Mrs Sheila
MacGregor, John


Farr, John
MacKay, John (Argyll)


Fell, Anthony
Macmillan, Rt Hon M.


Fenner, Mrs Peggy
McNair-Wilson, M. (N'bury)


Fisher, Sir Nigel
McNair-Wilson, P. (New F'st)


Fletcher, A. (Ed'nb'gh N)
McQuarrie, Albert


Fookes, Miss Janet
Madel, David


Forman, Nigel
Major, John


Fraser, Rt Hon Sir Hugh
Marland, Paul


Fraser, Peter (South Angus)
Marlow, Tony


Fry, Peter
Marshall Michael (Arundel)


Galbraith, Hon T. G. D.
Marten, Neil (Banbury)


Gardiner, George (Reigate)
Mather, Carol


Gardner, Edward (S Fylde)
Maude, Rt Hon Angus


Garel-Jones, Tristan
Mawby, Ray


Glyn, Dr Alan
Mawhinney, Dr Brian


Goodhew, Victor
Maxwell-Hyslop, Robin


Goodlad, Alastair
Mayhew, Patrick


Gorst, John
Mellor, David


Gower, Sir Raymond
Meyer, Sir Anthony


Grant, Anthony (Harrow C)
Miller, Hal (B'grove)


Gray, Hamish
Mills, Iain (Meriden)


Greenway, Harry
Mills, Peter (West Devon)


Grieve, Percy
Miscampbell, Norman


Griffiths, E.(B'y St. Edm'ds)
Mitchell, David (Basingstoke)


Griffiths, Peter Portsm'th N)
Moate, Roger


Grylls, Michael
Monro, Hector


Gummer, John Selwyn
Montgomery, Fergus


Hamilton, Hon A.
Moore, John


Hamilton, Michael (Salisbury)
Morris, M. (N'hampton S)


Hampson, Dr Keith
Morrison, Hon C. (Devizes)


Hannam, John
Morrison, Hon P. (Chester)


Haselhurst, Alan
Myles, David


Hastings, Stephen
Neale, Gerrard


Havers, Rt Hon Sir Michael
Needham, Richard


Hawkins, Paul
Nelson, Anthony


Hawksley, Warren
Neubert, Michael


Hayhoe, Barney
Newton, Tony


Heddle, John
Normanton, Tom


Henderson, Barry
Nott, Rt Hon John


Heseltine, Rt Hon Michael
Onslow, Cranley


Hicks, Robert
Oppenheim, Rt Hon Mrs S.


Higgins, Rt Hon Terence L.
Osborn, John


Hill, James
Page, Rt Hon Sir G. (Crosby)


Hogg, Hon Douglas (Gr'th'm)
Page, Richard (SW Herts)


Holland, Philip (Carlton)
Parkinson, Cecil


Hooson, Tom
Parris, Matthew


Hordern, Peter
Patten, Christopher (Bath)


Howe, Rt Hon Sir Geoffrey
Pattie, Geoffrey


Howell, Rt Hon D. (G'ldf'd)
Pawsey, James


Howell, Ralph (N Norfolk)
Peyton, Rt Hon John


Hunt, David (Wirral)
Pink, R. Bonner


Hunt, John (Ravensbourne)
Pollock, Alexander


Hurd, Hon Douglas
Porter, Barry


Irving, Charles (Cheltenham)
Price, Sir David (Eastleigh)


Jenkin, Rt Hon Patrick
Prior, Rt Hon James


Jessel, Toby
Proctor, K. Harvey


Johnson Smith, Geoffrey
Pym, Rt Hon Francis


Jopling, Rt Hon Michael
Raison, Timothy


Kellett-Bowman, Mrs Elaine
Rathbone, Tim


Kershaw, Anthony
Rees, Peter (Dover and Deal)


Kimball, Marcus
Rees-Davies, W. R.


King, Rt Hon Tom
Renton, Tim


Kitson, Sir Timothy
Rhodes James, Robert


Knight, Mrs Jill
Rhys Williams, Sir Brandon


Knox, David
Ridley, Hon Nicholas


Lamont, Norman
Ridsdale, Julian


Lang, Ian
Rippon, Rt Hon Geoffrey


Langford-Holt, Sir John
Rost, Peter


Latham, Michael
Sainsbury, Hon Timothy


Lawson, Nigel
Scott, Nicholas


Lee, John
Shaw, Giles (Pudsey)


Lennox-Boyd, Hon Mark
Shaw, Michael (Scarborough)


Lester Jim (Beeston)
Shelton, William (Streatham)


Lloyd, Peter (Fareham)
Shepherd, Colin (Hereford)


Loveridge, John
Shepherd, Richard


Luce, Richard
Shersby, Michael






Silvester, Fred
van Straubenzee, W. R.


Sims, Roger
Vaughan, Dr Gerard


Skeet, T. H. H.
Viggers, Peter


Smith, Dudley
Waddington, David


Speller, Tony
Wakeham, John


Spicer, Jim (West Dorset)
Waldegrave, Hon William


Spicer, Michael (S Worcs)
Walker, Rt Hon P.(W'cester)


Sproat, Ian
Walker, B. (Perth )


Squire, Robin
Walker-Smith, Rt Hon Sir D.


Stainton, Keith
Waller, Gary


Stanbrook, Ivor
Walters, Dennis


Steen, Anthony
Ward, John


Stevens, Martin
Warren, Kenneth


Stewart, Ian (Hitchin)
Watson, John


Stewart, J.(E Renfrewshire)
Wells, John (Maidstone)


Stokes, John
Wells, Bowen


Stradling Thomas, J.
Wheeler, John


Tapsell, Peter
Whitelaw, Rt Hon William


Taylor, Robert (Croydon NW)
Whitney, Raymond


Taylor, Teddy (S'end E)
Wickenden, Keith


Tebbit, Norman
Wiggin, Jerry


Temple-Morris, Peter
Wilkinson, John


Thomas, Rt Hon Peter
Williams, D.(Montgomery)


Thompson, Donald
Wolfson, Mark


Thorne, Neil (Ilford South)
Young, Sir George (Acton)


Thornton, Malcolm
Younger, Rt Hon George


Townend, John (Bridlington)



Townsend, Cyril D, (B'heath)
Tellers for the Ayes:


Trippier, David
Mr. Spencer Le Marchant and


Trotter, Neville
Mr. Anthony Berry.




NOES


Abse, Leo
Dean, Joseph (Leeds West)


Adams, Allen
Dempsey, James


Anderson, Donald
Dewar, Donald


Ashton, Joe
Dobson, Frank


Atkinson, N.(H'gey,)
Dormand, Jack


Bagier, Gordon A.T.
Douglas, Dick


Barnett, Guy (Greenwich)
Douglas-Mann, Bruce


Barnett, Rt Hon Joel (H'wd)
Duffy, A. E. P.


Beith, A. J.
Dunn, James A.


Bennett, Andrew (St'kp't N)
Dunnett, Jack


Bidwell, Sydney
Dunwoody, Hon Mrs G.


Booth, Rt Hon Albert
Eadie, Alex


Boothroyd, Miss Betty
Eastham, Ken


Bray, Dr Jeremy
Ellis, R. (NE D'bysh're)


Brown, Hugh D. (Provan)
Ellis, Tom (Wrexham)


Brown, R. C. (N'castle W)
English, Michael


Brown, Ron (E'burgh, Leith)
Ennals, Rt Hon David


Brown, Ronald W. (H'ckn'y S)
Evans, Ioan (Aberdare)


Buchan, Norman
Evans, John (Newton)


Callaghan, Rt Hon J.
Ewing, Harry


Callaghan., Jim (Midd't'n &amp; P)
Faulds, Andrew


Campbell, Ian
Field, Frank


Campbell-Savours, Dale
Fletcher, Raymond (Ilkeston)


Canavan, Dennis
Fletcher, Ted (Darlington)


Cant, R. B.
Foot, Rt Hon Michael


Carmichael, Neil
Forrester, John


Carter-Jones, Lewis
Foulkes, George


Cartwright, John
Fraser, J. (Lamb'th, N'w'd)


Clark, Dr David (S Shields)
Freeson, Rt Hon Reginald


Cocks, Rt Hon M (B'stol S)
Garrett, John (Norwich S)


Cohen, Stanley
George, Bruce


Coleman, Donald
Gilbert, Rt Hon Dr John


Conlan, Bernard
Ginsburg, David


Cook, Robin F.
Golding, John


Cowans, Harry
Gourlay, Harry


Cox, T. (Wdsw'th, Toot'g)
Grimond, Rt Hon J.


Crowther, J. S.
Hamilton, W. W. (C'tral Fife)


Cryer, Bob
Hardy, Peter


Cunliffe, Lawrence
Harrison, Rt Hon Walter


Cunningham, G. (Islington S)
Haynes, Frank


Cunningham, Dr J. (W'h'n)
Healey, Rt Hon Denis


Dalyell, Tam
Heffer, Eric S.


Davidson, Arthur
Hogg, N. (E Dunb't'nshire)


Davies, Rt Hon Denzil (L'lli)
Holland, S. (L'b'th, Vauxh'll)


Davies, Ifor (Gower)
Home Robertson, John


Davis, Clinton (Hackney C)
Homewood, William


Davis, T. (B'ham, Stechf'd)
Hooley, Frank


Deakins, Eric
Howell, Rt Hon D.





Huckfield, Les
Richardson, Jo


Hughes, Mark (Durham)
Roberts, Allan (Bootle)


Janner, Hon Greville
Roberts, Gwilym (Cannock)


Jay, Rt Hon Douglas
Robertson, George


John, Brynmor
Robinson, G. (Coventry NW)


Johnson, Walter (Derby S)
Rodgers, Rt Hon William


Johnston, Russell (Inverness)
Rooker, J. W.


Jones, Rt Hon Alec (Rh'dda)
Roper, John


Jones, Barry (East Flint)
Ross, Ernest (Dundee West)


Jones, Dan (Burnley)
Ross, Stephen (Isle of Wight)


Kaufman, Rt Hon Gerald
Rowlands, Ted


Kerr, Russell
Ryman, John


Kilroy-Silk, Robert
Sandelson, Neville


Lambie, David
Sever, John


Lamborn, Harry
Sheldon, Rt Hon R.


Leadbitter, Ted
Shore, Rt Hon Peter


Leighton, Ronald
Silkin, Rt Hon J. (Deptford)


Lewis, Arthur (N'ham NW)
Silkin, Rt Hon S. C. (Dulwich)


Litherland, Robert
Silverman, Julius


Lofthouse, Geoffrey
Soley, Clive


Lyons, Edward (Bradf'd W)
Spearing, Nigel


McCartney, Hugh
Spriggs, Leslie


McDonald, Dr Oonagh
Stallard, A. W.


McGuire, Michael (Ince)
Stewart, Rt Hon D. (W Isles)


McKay, Allen (Penistone)
Stoddart, David


McKelvey, William
Stott, Roger


MacKenzie, Rt Hon Gregor
Straw, Jack


Maclennan, Robert
Summerskill, Hon Dr Shirley


McNally, Thomas
Taylor, Mrs Ann (Bolton W)


McTaggart, Robert
Thomas, Jeffrey (Abertillery)


McWilliam, John
Thomas, Mike (Newcastle E)


Marks, Kenneth
Thomas, Dr R.(Carmarthen)


Marshall, Dr Edmund (Goole)
Tilley, John


Martin, M (G'gow S'burn)
Tinn, James


Meacher, Michael
Torney, Tom


Mellish, Rt Hon Robert
Wainwright, E. (Dearne V)


Mikardo, Ian
Wainwright, R. (Colne V)


Millan, Rt Hon Bruce
Walker, Rt Hon H. (D'caster)


Miller, Dr M. S. (E Kilbride)
Watkins, David


Morris, Rt Hon A. (W'shawe)
Welsh, Michael


Morris, Rt Hon C. (O'shaw)
White, Frank R.


Morris, Rt Hon J. (Aberavon)
White, J. (G'gow Pollok)


Morton, George
Whitehead, Phillip


Moyle, Rt Hon Roland
Whitlock, William


Mulley, Rt Hon Frederick
Wigley, Dafydd


Newens, Stanley
Willey, Rt Hon Frederick


Oakes, Rt Hon Gordon
Williams, Rt Hon A.(S'sea W)


Ogden, Eric
Wilson, Gordon (Dundee E)


O'Halloran, Michael
Winnick, David


O'Neill, Martin
Woodall, Alec


Palmer, Arthur
Wrigglesworth, Ian


Parker, John
Young, David (Bolton E)


Pavitt, Laurie



Price, C. (Lewisham W)
Tellers for the Noes:


Race, Reg
Mr. Austin Mitchell and


Rees, Rt Hon M (Leeds S)
Mr. James Hamilton.

Question accordingly agreed to.

Social Security (Contributions) Bill

Again considered in Committee.

[Mr. RICHARD CRAWSHAW in the Chair]

Question again proposed, That the amendment be made.

Mr. Buchan: I am sorry about the outcome of the interruption. We were hoping that Conservative Members would join us in recognising that such Bills should not be rushed through the House. We should stop the debate now and return next week to discuss the Bill in a proper businesslike fashion. If I have to keep the Committee up until the early hours of the morning, it is the fault of the Government Front Bench.
One of the worst and saddest aspects of the Bill is that, in the face of the biggest economic crisis for 50 years—I believe that it is more serious even than the crisis of the 1930s—the best the Government can do is to extract yet another £1 billion out of the working people to deflate the economy. It is the meanness and pettiness of the action that annoys us as much as anything.
I was interested in the Secretary of State's reasons for this shambles of a method of dealing with the problem and pushing the Bill through tonight. He said that it was being done for mechanical reasons. He made a distinction between the problems with handling PAYE and those with national insurance contributions. He said that the measure had to go through tonight to get the tables in order. It does not have to go through tonight. If the Government want to take £1 billion out of the economy, they can do it through taxes. They do not do so because they are afraid. They made many promises to the country when they came to power to cut taxes. Even so, those cuts have been rendered nugatory by the indirect taxes that they have raised in an attempt to avoid raising direct taxes. There is no excuse for this shabby package being presented to us in this way.
The Bill has little to do with the National Health Service. It is an economic, a budgeting response and is not a matter of national insurance. By taking such measures, by trying to counter the crisis they have created for themselves largely by their deflationary methods, the Government have turned what could have been a short-term crisis of an interim cyclical recession into a major long-term decline. Measures such as this, petty as they are, are part of the package that has been destroying Britain's basic industrial economy. The Government must bear that in mind to understand some of our anger.
The Bill, purporting to be concerned with the national insurance fund but in reality a deflationary economic decision, is self-defeating. The Government have got themselves on a ratchet on which every measure they take creates yet another 100,000 unemployed, and every increase in unemployment leads to an increase in the public sector borrowing requirement. The very measures that they are taking to defeat inflation are therefore expanding the PSBR. If the Secretary of State disagrees with that, let him produce the figures for when his Government came to power and for now. The Government have increased the requirement.
The same applies to the money supply, with which the Government claim to have dealt. We say that the money supply is out of control, and they ask us why we are complaining because we do not believe in that type of policy. It is true that we do not, but they do. They regard it as the fount and origin of the actions they should carry out.
The Secretary of State spoke tonight about the new mood of realism among workers which, he said, would lead to lower wage settlements. The point was raised by my hon. Friend the Member for Wood Green (Mr. Race), who linked the Bill to the problem of wages. There is a new mood of realism, but it is the one referred to by my hon. Friend the Member for Keighley (Mr. Cryer) when he was quoting the speech by the Chief Secretary last night. We want a new mood of realism, and there it is. The

Chief Secretary is beginning to see the error of his ways, and he is one of the pundits in that area. The Secretary of State should follow suit.
In what way do we regard this measure as being not only unnecessary but unjust? Let us compare it with the other financial measures taken by the Government during the past 18 months. In the first Budget, they fulfilled their promise by cutting £4½ billion of direct taxation, of which 37 per cent.—more than one-third—went to the richest 7 per cent. of the community. That is a redistribution of wealth with a vengeance. There was little justice in that. There might have been some economic argument for it if that top 7 per cent. had used the money for investment. They did not, and nor will they, because the other aspect of the Government's policy, the high bank rate and the level of the pound, have rendered nugatory even that release of resources to the investing class.
That increase in finances was at the expense of the workers' pockets. They are being soaked again to deal with the immediate crisis. They had to pay for that increase in the form of value added tax, savage cuts in the social wage and other proposals. We were told that the Government needed to take £1 billion out of the economy to save Britain. It is £1 billion from working people. Yet this week, on the basis of the Rayner proposals, the Secretary of State—for a paltry £50 million as against this £1 billion crisis—changed the method of allocation of money to working and other mothers in proposals for the child benefit allowance.
The Government do not understand how people live. Members on the Government side do not live, as do many Labour Members, with the problems of poverty. As an indication of the rise of poverty in Britain, let us consider the voluntary action of women drawing child benefit. They can draw it weekly, fortnightly, three-weekly or four-weekly. In the past year, the numbers drawing child benfit weekly increased by more than one-third. In June 1979, 35 per cent. drew the benefit weekly. In June 1980, the figure was 45 per cent. That increase of one-third is a direct indication of the strain that is being put not only on the poor but on many others. The 45 per cent. goes well beyond the 20 per cent. that the Government talk about in the peculiar view that they have of the poor in Britain as a caste that must be identified by family income supplement or something else. That 45 per cent. includes reasonably well-off working families. Yet they need to take that voluntary action. It is a nuisance to draw the benefit weekly. It is an indication of the poverty in Britain.
My hon. Friend the Member for Fife, Central (Mr. Hamilton) pointed out that workers earning £40 per week at 1979 prices would keep only 62·25p of every additional pound that they earned. They lose at £40 per week. They have dropped from keeping 68p to keeping only 62p. On the other hand, those earning £500 per week, who a year before could keep only 17p in the pound, can now keep 40p. That more than doubles the amount going into the pockets of the rich. There is a direct loss to the pockets of the poor through taxation.
That is the background against which we must consider the measure before us. Let us consider the arguments in favour of it. One argument was that it would produce incentives. Where is the incentive in the Bill? The Government are increasing contributions on the one hand, and on the other hand they are maintaining the lower limits at which contributions begin. Instead of increasing the incentives for people to work, they are almost deliberately


creating disincentives. They are putting more people into the poverty trap and keeping them there. There will be little incentive for them to do other than campaign even more for higher wages.
The Bill purports to be about social security, but it is nothing of the kind. It is a Bill about taxation. It is a Bill about the failure of the Government to deal with the economic crisis which they themselves have largely created. It results from the Government's own decision to increase taxes. They were afraid to increase direct taxes. What they have done instead is to call for a further contribution from the workers.
Incidentally. Mr. Crawshaw, this has nothing whatever to do with the discussion that we shall be having—no doubt in the early hours of the morning—on the relative proportions of the Treasury allocation and contributions within the national insurance fund. Basically, the Bill is merely raising money.
It is said that the Bill can partly be excused on the ground that ¼ per cent. is given in the unemployment sector. We might have forgiven that ¼ per cent. if it had been allocated between employees and employers. The Government have created more than 2 million unemployed. Having created 2 million unemployed—

Mr. Paul Dean: The gist of the hon. Gentleman's remarks is that revenue which would be available under the Bill for pensions and other benefits and for the National Health Service will not now be available, according to the argument that he is using. If he accepts that—and he must, in view of what he said—where is he to raise the money? Is he to increase personal direct taxation? If so, candour requires that he should tell the Committee frankly that that is his proposition.

The Second Deputy Chairman: Order. I do not think that the hon. Gentleman was in the Chamber when the Chairman made some comments about debating where money is to be raised. I am sure that it is not a necessary part of the Opposition's case to say where it is to be raised. It is for the Opposition to press the amendment. I say this because the debate has been getting so wide as to cover every aspect of policy. It is no part of this Committee stage to be debating where the money would be raised. It is a matter of saying whether it is appropriate to raise it in this particular way.

Mr. Cryer: On a point of order, Mr. Crawshaw. There are one or two Conservative Members who are sniggering about this matter. You have been reiterating a position that you made clear earlier when those hon. Members were not in the Chamber and when several Opposition Members were setting out a number of very cogently argued alternatives for the money. I think that you can confirm that.

The Second Deputy Chairman: That is the reason why I did not want the debate to get any wider. That is why I said that I had already given a ruling on it.

Mr. Buchan: I am always in support of the Chair. I should very much have liked to suggest ideas, such as increasing the ceiling on contributions. I might even have been tempted to mention the word "defence", but, since you say that it is out of order, Mr. Crawshaw, I shall not mention it. I might even have said that we could reverse the taxation concept here in order to tax the rich to help the poor. But, again, since it is out of order, I shall not, of course, deal with it.

Mr. Ioan Evans: Does my hon. Friend agree that working people are concerned with their take-home pay and that it is kidology for the Government to try to tell people that they are reducing taxation when they are moving the burden from direct to indirect taxation? We recall that in their first Budget the Government gave massive concessions to the wealthy. Now, they are proceeding to increase the national insurance contributions of the less-well-off, the low-paid. The workers know this when they look at their take-home pay.

Mr. Buchan: My hon. Friend has put it more succinctly than I have been able to do in the past 20 minutes or so. It is not only the working people who see these contributions as tax. Conservative Members also see them as a tax. The Secretary of State said:
Strictly speaking, the sums involved here are not taxation, but I suspect that for most people increasingly their national insurance contributions have more the quality of taxation than they used to do".—[Official Report, 5 December 1978; Vol. 959, c. 1369]
The right hon. Gentleman accepts that. The Secretary of State for Trade raised a point of order. Conservatives seem to do a lot of their work through points of order. Perhaps we should learn from them. In 1976 the right hon. Gentleman claimed that the increases in national insurance were a "pure tax increase". I could not have put it better myself.
The Minister for Social Security is missing. Where is Reg? I was looking forward to seeing him. Perhaps he is having a day off. Perhaps his old conscience has surfaced. The right hon. Gentleman said:
If we reduce the expenditure from the rational insurance fund and if the contribution is also reduced—I am saying 'if because other factors come into it"—
our Reg is a careful lad—
we are still fulfilling the objective of reducing taxation because national insurance contributions are a form of tax.
That is how the Government see it.
Therefore, we are right to argue that, if it is a tax, it should have been introduced in that form. That would have been fairer. We object to the way in which the Government are dealing with this crisis. They are not helping the National Health Service. The cuts will still be there. Those who work as hospital cleaners will still come to our surgeries. The Bill will not raise money for the NHS.
Several objections can be made to the Government's method. They have undermined the people's faith and have attacked their confidence in the social insurance principle. They have increased contributions when the benefits that they are supposedly funding art being savagely cut. Benefits of every variety are being cut, including short-term benefits, such as those for sickness, invalidity, industrial injury and unemployment.
The Government are not content with merely breaking the connection between pensions and earnings or prices, whichever is the higher. We have been forced to accept the connection with prices. If my light hon. and hon. Friends and the leader-writers are right, the Cabinet meeting was a close-run thing. As I said on Tuesday, it was only the "wets" who saved the Government's face. Instead, the Government want to set pensions 1 per cent. lower than inflation. What for? Do they want to drive all our 75-year-olds out to work? What is the point? The only motive is meanness.

Sir Frederick Burden: On a point of order, Mr. Crawshaw. Is it right to engage in arguments about old-age pensions? I thought that such discussion was out of order.

The Second Deputy Chairman: I think that hon. Members on both sides of the Committee have discussed this matter.

Mr. Buchan: I thought that I was sticking more to the real nature and purpose of the Bill than did the Secretary of State. I am dealing with the reasons for and the purpose and effect of the Bill.
This measure cannot do anything but damage regard for the social insurance principle if the Government persist in increasing contributions when the benefits are being savagely cut.
There are other reasons why we object to specific parts of the Bill. My amendment seeks to wipe out the 1 per cent. impost. Therefore, it must be in order. The second objection is that the proposal is unjust. Income tax is paid on both earned and unearned income. National insurance contributions are paid only on earned income. Therefore, the workers and some sections of management will pay, and not those who live on interest, dividends and rents.
Income tax has a threshold before one starts to pay. That is not so with these contributions. Contributions begin at £27 a week, which is close to the supplementary benefit level for a single person. Income tax is paid at higher rates if one is better off and can afford it. But these contributions are not paid on earnings above a certain ceiling. I was asked about money. Here is one way in which we can look at money. We could remove the ceiling of £200 a week. After all, that is £10,000 a year. Should not that ceiling have been raised or even wiped out in favour of a graduated return in benefits following that?
There are other ways of dealing with this matter. At the moment, it is unjust—even in the Bill it is unjust—because those who are paying at the bottom end—my hon. Friend the Member for Birmingham, Perry Barr (Mr. Rooker) will keep my figures right on this aspect—will have the limit raised by 22 per cent., whereas the ceiling is raised by only 17 per cent. Have I got it right?

Mr. Rooker: No. It is the other way round.

Mr. Buchan: My hon. Friend is quite right; it is the other way round. The floor has been lifted by 22 per cent., so people are being brought in at £27 a week; but the other end of the scale has not been lifted by an equivalent figure. I have never claimed to be numerate, but I understand this. The imbalance between the two figures means that the poor are clobbered and the rich get richer.
This proposal is unfair also because income tax is graduated—higher earners pay more tax—but national insurance contributions are partly flat rate. By the way, this also affects the friends and supporters of the self-employed. It is a flat rate for the poorer self-employed and, for that matter, the better-off self-employed whom the Conservative Party wooed so assiduously at the election.
I do not want to go much further, although I think that some of my hon. Friends will want to comment on what I and the Secretary of State have said. I should like to finish by quoting from an article by David Wyn Williams in New Society:
National insurance contributions have been quietly converted into a second income tax.

He then goes on to analyse why they are more unfair than income tax:
Thus in each of these ways, the present rates of national insurance contributions go a considerable way to negate the complex adjustments whereby the income tax system seeks to work social justice between differing taxpayers on account of differing commitments, needs, and sources of income. If the regressive effects of VAT and the other expenditure taxes were brought into the analysis".
The thing has become even more unfair because of the overburden of these taxes.
We shall shortly be discussing the relationship between the taxation element of the national insurance fund in relation to the contributions. For the moment, we reject this part of the clause, and I call upon hon. Members on all sides—because there must still be some "wets" here even at 10.40 pm—to vote with us.

Mr. Field: I rise once again to draw attention to the unsatisfactory nature of the Secretary of State's reply. I want to draw his attention to three points. If I am brief, it may encourage him to respond in a more positive manner than he has done so far.
I turn to the point made by my hon. Friend the Member for Wood Green (Mr. Race) about the Conservative Party's election manifesto, particularly that part which dealt with the high marginal rates of taxation. The Conservative election manifesto was quite clear on this point. It said that high marginal rates of tax operated at the top and the bottom. What we are partly discussing this evening is how effectively, or otherwise, the Government have delivered on that pledge in respect of those on the bottom.
As my hon. Friend the Member for Fife, Central (Mr. Hamilton) did not make full use of the Low Pay Unit brief, I direct the Secretary of State's attention to the figures that it gives for changes in the marginal rates of tax for those at the top and the bottom. For those on the 83 per cent. marginal tax rate when the Government came into power, the rate has been reduced to 60 per cent. If I am right, that is a reduction of just more than 20 per cent. But for those earning around £40 a week there has been an increase in the marginal rates from 31·5 percent. to 37·5 percent.—a 6·25 per cent. increase. If that is taken over the base, it is something like a 20 per cent. increase in their marginal rates of tax.
We have tabled these amendments to draw attention to that fact that while the Government have delivered in respect of high-rate taxpayers—because they believe that it was important—the exact opposite has occurred for the low-paid, although both groups were bound together in the same pledge in the Conservative election manifesto. I am sure that the Committee would be grateful to hear a reasoned reply from the Secretary of State about how he squares that election promise with the reality. If it was good enough for those on high pay, why was not that election promise good enough for those on low pay?
Secondly, I want to develop a little further the main point of the Liberal Party's amendment. It was said that if we adopted that proposal, or a much more modest one that I floated but did not table, given the fact that we accepted how regressive the national insurance contribution was—starting from each pound once one had crossed the national insurance threshold—there might be a case for graduating the contribution for those on low pay. We were told that that was not on, because it would somehow violate the covenant that was made between the


parties in the House and between the House and pension schemes in the private sector. That does not stand up to reason. What private pension scheme will object because the House has decided that the regressive national insurance poll tax should be lessened for those at the bottom of the pile?
Earlier this evening we failed to raise the floor of the national insurance contributions, which was a way of helping low-paid workers, particularly women, who constitute the majority of low-paid workers. We were told by the Secretary of State that that would have covered a mere 200,000 workers. If his figures are right, the number would be equal to the electorate of Daventry, Wallasey and Wanstead. That is the size of the group that was affected adversely by the amendments that were rejected earlier.
10.45 pm
We ate trying to retrieve part of that position now by making sure that either some groups of workers—the lower-paid workers—have a lower rate of national insurance contribution or there is no increase in the national insurance contribution. Will the Secretary of State turn his mind to that point" Does he maintain that if the national insurance contribution were made fairer for the low-paid, the pension funds would be in revolt? If there is to be a further increase in the national insurance contribution next year—as no doubt there will be—and if the right hon. Gentleman expects hon. Members from both sides of the House to support him, as I do, in an increase only for employees, there is a duty on all of us to ensure that the regressiveness of the tax is less for those on low pay.
Thirdly, I should like to draw the Committee's attention to the increases in national insurance contributions, which are not classified as taxation increases in a technical sense, and to the reason why, in the past, we have not viewed national insurance increases as increases in taxation. No previous Government have increased the contributions and in the same benefit year planned reductions in benefits. It would have been easy for Governments to say that this was an insurance scheme and that they were asking for contributions because there would be increased benefits.
We are now at the stage when there will be increased contributions and less benefits. We should view that as an increase in taxation and discuss ways of raising it more fairly if the Secretary of State will not meet our points about the regressiveness of the tax and how it affects workers on low pay—particularly women workers, who compose the army of the low-paid. The more he stubbornly refuses to meet us on these points, the more difficult it is. I apologise for returning to the same point, but it is crucial. If, in the next few years, there is no growth, people will have to face sensibly the question of financing the Welfare State. We must get them to consider how they can spread their lifetime earnings of 40 years over a lifetime of about 80 years. We shall never be able to get that argument on the road if at the time that we are increasing contributions we are cutting benefits.
I should like to emphasise before you leave us, Mr. Crawshaw—I hope only temporarily—that I am asking the Secretary of State to respond sensibly and seriously to our points about the difference in the Government's election promises and their performance in fulfilling them. They have reduced the high marginal tax rates for the rich, but they have increased them for the poor, although they

promised effective action to reduce the marginal tax rates for the poor. Does the Secretary of State seriously maintain that if we did something to mitigate the hardship on the lowest-paid the pension funds would clamour round and lobby and jostle him on his way to his office at the Elephant and Castle tomorrow morning? Does he maintain that this is not an increase in taxation when, at the same time, he is cutting benefits?

Mr. Andrew F. Bennett: We were disappointed with the Secretary of State's reply, because he seemed more concerned to sit down at 10 o'clock than to answer our questions. We wanted to know more about the ¼ per cent. that is being requested because of the problems of unemployment. I asked whether it was all necessary for the unemployed or whether more people were coming on to pensions. The right hon. Gentleman did not enlighten us.
The Secretary of State reiterated his belief in the so-called deal that he claims was reached on an agreed policy for pensions. He does not accept that he tore up the deal last year when he took away the link with earnings. The whole basis of the deal was that there would be a steady increase in pensions, because pensioners would get the benefit of rises in line with prices or earnings, whichever was the greater—the ratchet effect. That was an essential part of the deal. The right hon. Gentleman cannot change the rules and claim that the deal still exists.
The right hon. Gentleman did not say much about amendments Nos. 7 and 9. He did not answer our question whether the burden could have been shifted on to the employer rather than the employee. He did not give us the breakdown of the incidence of the burdens on the two groups. There is some evidence that the low-paid may benefit a little if the onus is placed on employers rather than on employees. The Secretary of State should have explained why the amendments are unacceptable.
We may be at fault on amendment No. 8, because we have not spent much time discussing it. It draws attention to the fact that if the Government's case were that payments had to go up because extra benefits were being paid, only the ¼ per cent. increase would be needed. As we have pointed out, individual claimants will get less in real terms in future. In that case, the Government's only argument can be that more people will be receiving benefits. I suppose that they will be the increasing numbers of unemployed for whom the Government are planning.
The other ¾ per cent. involves nothing but the Government's monetary policies—a saving on Exchequer NHS contributions and other Treasury money-saving decisions. The ¾ per cent. has nothing to do with the national insurance principle. If the Minister will not accept amendment No. 5 to delete the whole clause, he ought to agree that the only portion for which he has a case is the ¼ per cent. for the unemployed and pensioners. I hope that he will tell us how much is needed for extra pensions and how much for increased unemployment.

Mr. Cryer: The Secretary of State failed to answer a number of questions raised by the Opposition. While you were out of the Chair, Mr. Godman Irvine, several Conservative Members raised, in a rather jeering manner, the issue of alternative sources of income, and I had to point out that I had spent some time setting out what I thought should be the alternatives. It is important to present a credible alternative when one says that a clause should be removed.
It is true that the Secretary of State did not go down that road, but he did say that the money was necessary for, among other things, the maintenance of the National Health Service, and he had an altercation with my right hon. Friend the Member for Norwich, North (Mr. Ennals) about the relative position under the present Government. But everyone understands perfectly well the situation of the NHS—that it is facing grave difficulties and that the position of the Government is not that they want to maintain the NHS but that they are quite happy to see it eroded. They welcome private schemes and private hospitals and a shift of resources from the public to the private sector. I thought that the Secretary of State's claim that the money was needed for the NHS was particularly weak, especially as we know that a very small proportion of this revenue is likely to find its way there in any event.
The other point that the right hon. Gentleman answered rather inadequately was the question of the 6 per cent. It was pointed out to him that the Government have a policy of a 6 per cent. imposition to limit wages in the public sector and yet wage earners will find that they have a 14 per cent. increase in their rate of national insurance contributions, if these amendments are not carried, at a time when we are facing an annual inflation rate of about 15 or 16 per cent. The increase in contributions is an increase in taxation, as was demonstrated by my hon. Friend the Member for Renfrewshire, West (Mr. Buchan), who pointed out that many hon. Members, not from the Labour Benches but from the Conservative Benches, have referred again and again to these national insurance charges as being a tax.
This rate of tax increase is very high indeed and simply does not square with the Conservatives' much-vaunted claim, in their manifesto, that they would reduce taxation for those at the lowest and the highest levels of income. They have simply said "This is not a tax", but the Secretary of State must accept that the rate of increase in the national insurance contribution under subsection (2) is about 14 per cent. That really is a very large increase, and it is contrary to the Conservative manifesto.
The only way in which the right hon. Gentleman can justify it is by saying that it is not a tax but simply a national insurance surcharge. But the effect of removing money from a wage packet is exactly the same, whether one calls it a surcharge, a contribution or a tax. It is a wholesale breach of the Conservatives' commitment, and it would be far and away better if the Government admitted it and said "We will restore some of the cuts that we made on the marginal rates of the rich"—they were massive cuts—"in order to give ourselves a proper, fairer and progressive source of taxation" rather than use this blunt instrument to raise the money.

Mr. Dobson: No doubt the Secretary of State will cavil about the wording, but on page 14 the Conservative manifesto said:
We must therefore be prepared to switch to some extent from taxes on earnings to taxes on spending.
That was used to justify the increase in value added tax, but I think that it is clear that tonight we are talking about a tax on earnings.

Mr. Cryer: Yes, indeed. My hon. Friend confirms the precise principle of what I was saying—that the Bill represents a clear breach of that commitment; and I hope that the message goes out clearly to all those who were lured into voting Conservative. I must say that they are

very thin on the ground these days. Not many people admit that they voted Conservative, and those who admit it do so with a shamefaced, grudging attitude, recognising the disastrous policies that the Government have been following.
11 pm
The Secretary of State is increasing the contributions on behalf of the Treasury. We learn from leaks that he is an enthusiastic supporter of the Treasury view, proffering cuts in his Department without any pressure. At the same time, there is a 5 per cent. cut in benefits. The Chief Secretary to the Treasury has said that if one wills the end one must will the means. The end is not quite the system that the Government inherited from the Labour Government; it is a diminishing end. Therefore, it represents a very bad bargain—contributions increased by 14 per cent. and a reduction in benefits of 5 per cent. If that were done by an insurance company, the organisers might well find themselves without many supporters and, depending on their prospectus, facing criminal charges. The Conservatives' prospectus claimed the reverse of what is happening.
The Chief Secretary is one of the few thinkers in the Cabinet. The Guardian, thanks to a mole among Conservative Back Benchers, tells us that he is now veering away from the targets. His is the right view. If the Conservatives are to prevent the present crisis enveloping us—the crisis that is the reason for raising £1 billion under the clause—they will have to be much more flexible and cease being so oppressive to the person least able to withstand their oppression, the ordinary wage earner.
The Secretary of State said that it was necessary to have the £1 billion. We have shown that the Government's means are not the only ones open. They are adopting them because they are a narrow-minded, petty Government of the rich, by the rich and for the rich. That is why they do not adopt a progressive taxation system. They prefer to put the burden on the backs of the poor.
That is why we oppose the clause and support the amendments. I hope that even at this late stage the Secretary of State will say that the Government are considering alternative ways of raising the £1 billion.

Mr. Race: It would be remiss of Opposition Members not to congratulate my hon. Friend the Member for Renfrewshire, West (Mr. Buchan) on his excellent speech. I am sure that all Labour Members hope that he will make a number of such scathing attacks on the Government over the next few months and in due course make some speeches from the Government Dispatch Box.
We must address ourselves to the Government's arguments for the 1 per cent. increase in the employee's national insurance contribution. As we all know, as we all read the newspapers, the increase was decided upon after a long discussion in the Cabinet about the way in which the Government would raise money for the public service and in particular to reduce the public sector borrowing requirement. It is clear from the Secretary of State's Second Reading speech that the Government's intention was simply to provide money for that purpose.
No doubt the Cabinet discussed alternative methods of financing the PSBR other than the proposals that are set out in the clause. If there were arguments in the Cabinet about the ways in which such a substantial sum could be raised, it is right for the Committee to discuss the


alternatives and to draw attention to the way in which the Government might deal with the situation in which they find themselves.
Every time the unemployed increase by 100,000, the net cost to the PSBR is about £440 million. That is the figure produced not by the Labour Party research department but by the Library in an excellent document on the cost of unemployment. I have no doubt that the 1 per cent. increase in employees' contributions that is called for in the Bill is a direct and inevitable consequence of the Government's policy of allowing unemployment to rip ahead. The more that it rips ahead, the more Bills like this we shall get and the more the Secretary of State will be forced by his Cabinet colleagues to activate the sections in the Social Security (No. 2) Act 1980 that allow for the 5 per cent. cut in unemployment and other benefits in the next financial year as well as in this year.
My hon. Friend the Member for Keighley (Mr. Cryer) drew attention to the increases in employees' contributions hat have been called for at a time when benefits are being out. The No. 2 Act is on the statute book, and I have no doubt that in due course the Cabinet will be discussing whether the relevant sections are to be activated and whether benefits will be cut again in the next financial year.
The political purpose of the clause is clear. It is to fund the Government's central objective, which is to allow unemployment to rise. They will allow the pressure in the labour market to depress wages and to attack the real living standards: of ordinary working people. That is the only way in which they can pursue heir policy of reducing the power of labour in the overall economy.
The impact of such a change in the economy is bound to be substantially deflationary. National insurance contributions from employees or employers have an effect on the level of economic activity and on the level of employment in certain industries. The clawing back of £1,000 million from taxpayers is bound to increase unemployment substantially. It is a straightforward piece of economic deflation.
The Committee would be right to delete the clause. However, I refer to amendment No. 6, the Liberal amendment, which raises an important principle that the Committee should discuss fully. At what point, if any, should the national insurance system be based on the level of earnings of a particular employee? We have a floor and a ceiling, and between those two points the national insurance system tends to work on a uniform basis irrespective of the level of earnings of the individual.
Great play has rightly been made with the argument that the national insurance system is regressive and favours the well-off at the expense of the low-paid. The Liberal amendment seeks to reduce the regressive effects of a national insurance system, if we are to have one at all, by allowing the existing rate of employees' contributions to be levied on those who receive less than £85 a week and the new rate to be levied on those with incomes in excess of that sum.
Why has the Liberal Party chosen £85 as the cut-off point? If a system of graduated national insurance employees' contributions is operated, there is a great deal of sense in having a number of bands activated at different income cut-off points. For example, there would be a case for having a contribution band clearly linked to those groups in receipt of or eligible for certain State benefits, such as family income supplement. There could be a lower

rate band of employees' contribution for a certain range of incomes. There could then be a series of bands of income contributions at higher earnings levels. If we are to have a progressive system of contributions, there should be a series of cut-off points that could be specified by Parliament and changed in accordance with changing circumstances.
However, for the life of me I cannot understand why the Liberal Party has chosen £85 as the cut-off point. It does not relate to the average earnings of the male full-time worker, which at the last count in the new earnings survey were about £125. Presumably it is an attempt to deal with the problems of the low-paid, but the level does not relate to the level of State benefits or the number of people in particular income bands.
If we cannot get the progressive changes that are required in the national insurance system, we should delete the clause and throw the political football right back to the Government to sort out. We should tell them that we do not want that form of extra taxation on the low-paid and workers generally. If they want to solve the problems of the economy, they should solve them in a totally different way and not by imposing further inordinate burdens on ordinary working people.

Mr. Dobson: One point not touched on by my colleagues causes me concern. With increasing unemployment, there is a danger of increasing social division. The Government's presentation of the increase in national insurance contributions may, either inadvertently or deliberately, be seeking to provoke enmity between the unemployed and people in work.
In his mini-Budget on 24 November, the Chancellor said about the national insurance fund:
Thirdly, the fund at present receives a substantial contribution from the general taxpayer through the Treasury supplement.… In these circumstances, it is right that those in work should shoulder directly a larger share of the cost of contributory benefits."—[Official Report, 24 November 1980; Vol. 994, c. 316.]
11.15 pm
Ministers in the Treasury, and especially Ministers in the Department of Health and Social Security, constantly go on about scroungers and proudly announce that they have appointed more and more people to sort out scrounging among social security claimants. We may be witnessing an attempt by the Government to cause those who are in work and whose incomes are reduced to become antipathetic about the level of unemployment benefit paid to those whom the Government are driving to the dole. In that sense, the Bill sows the seeds of an unpleasant social division.
Our stand stems not so much from the content of the Bill but from the way in which it is being presented by the Government and the nature and history of those who have devised that form of presentation. That is a further reason why the Committee should support the amendment in its attempt to reject that concept lock, stock and barrel.

The Parliamentary Secretary to the Treasury (Mr. Michael Jopling): The Parliamentary Secretary to the Treasury (Mr. Michael Jopling) rose in his place and claimed to move, That the Question be now put.

Question put, That the Question be now put:—

The Committee divided: Ayes 251, Noes 81.

Division No. 19]
[11.17 pm


AYES


Alexander, Richard
Arnold, Tom


Ancram, Michael
Aspinwall, Jack






Atkins, Robert (Preston N)
Greenway, Harry


Atkinson, David (B'm'th,E)
Grieve, Percy


Baker, Kenneth (St.M'bone)
Griffiths, E.(B'y St. Edm'ds)


Baker, Nicholas (N Dorset)
Griffiths, Peter Portsm'th N)


Banks, Robert
Grylls, Michael


Beaumont-Dark, Anthony
Gummer, John Selwyn


Bendall, Vivian
Hamilton, Hon A.


Benyon, Thomas (A'don)
Hampson, Dr Keith


Benyon, W. (Buckingham)
Hannam, John


Best, Keith
Haselhurst, Alan


Bevan, David Gilroy
Hastings, Stephen


Biffen, Rt Hon John
Havers, Rt Hon Sir Michael


Biggs-Davison, John
Hawkins, Paul


Blackburn, John
Hawksley, Warren


Blaker, Peter
Heddle, John


Bonsor, Sir Nicholas
Henderson, Barry


Boscawen, Hon Robert
Heseltine, Rt Hon Michael


Bottomley, Peter (W'wich W)
Hicks, Robert


Bowden, Andrew
Hogg, Hon Douglas (Gr'th'm)


Braine, Sir Bernard
Hooson, Tom


Bright, Graham
Howell, Ralph (N Norfolk)


Brinton, Tim
Hunt, David (Wirral)


Brittan, Leon
Hunt, John (Ravensbourne)


Brooke, Hon Peter
Hurd, Hon Douglas


Brotherton, Michael
Jenkin, Rt Hon Patrick


Brown, M.(Brigg and Scun)
Jessel, Toby


Browne, John (Winchester)
Johnson Smith, Geoffrey


Bruce-Gardyne, John
Jopling, Rt Hon Michael


Bryan, Sir Paul
Kershaw, Anthony


Buck, Antony
King, Rt Hon Tom


Budgen, Nick
Kitson, Sir Timothy


Butcher, John
Knight, Mrs Jill


Butler, Hon Adam
Knox, David


Cad bury, Jocelyn
Lamont, Norman


Carlisle, John (Luton West)
Lang, Ian


Carlisle, Kenneth (Lincoln)
Langford-Holt, Sir John


Carlisle, Rt Hon M. (R'c'n )
Latham, Michael


Chalker, Mrs. Lynda
Lawson, Nigel


Channon, Rt. Hon. Paul
Lennox-Boyd, Hon Mark


Churchill, W. S.
Lester Jim (Beeston)


Clark, Hon A. (Plym'th, S'n)
Lloyd, Peter (Fareham)


Clark, Sir W. (Croydon S)
Loveridge, John


Clarke, Kenneth (Rushcliffe)
Luce, Richard


Clegg, Sir Walter
Lyell, Nicholas


Cockeram, Eric
McCrindle, Robert


Colvin, Michael
Macfarlane, Neil


Cope, John
MacGregor, John


Corrie, John
MacKay, John (Argyll)


Costain, Sir Albert
Macmillan, Rt Hon M.


Cranborne, Viscount
McNair-Wilson, M. (N'bury)


Crouch, David
McNair-Wilson. P. (New F'st)


Dean, Paul (North Somerset)
McQuarrie, Albert


Dickens, Geoffrey
Madel, David


Dorrell, Stephen
Major, John


Douglas-Hamilton, Lord J.
Marland, Paul


Dunn, Robert (Dartford)
Marlow, Tony


Durant, Tony
Marten, Neil (Banbury)


Dykes, Hugh
Mates, Michael


Eggar, Tim
Mather, Carol


Elliott, Sir William
Maude, Rt Hon Angus


Emery, Peter
Mawhinney, Dr Brian


Eyre, Reginald
Maxwell-Hyslop, Robin


Fairbairn, Nicholas
Mayhew, Patrick


Faith, Mrs Sheila
Mellor, David


Farr, John
Meyer, Sir Anthony


Fell, Anthony
Miller, Hal (B'grove)


Fenner, Mrs Peggy
Mills, Iain (Meriden)


Fletcher, A. (Ed'nb'gh N)
Mills, Peter (West Devon)


Fookes, Miss Janet
Miscampbell, Norman


Forman, Nigel
Mitchell, David (Basingstoke)


Fraser, Rt Hon Sir Hugh
Moate, Roger


Fraser, Peter (South Angus)
Montgomery, Fergus


Fry, Peter
Moore, John


Galbraith, Hon T. G. D.
Morris, M. (N'hampton S)


Gardiner, George (Reigate)
Morrison, Hon C. (Devizes)


Gardner, Edward (S Fylde)
Morrison, Hon P. (Chester)


Garel-Jones, Tristan
Myles, David


Goodhew, Victor
Neale, Gerrard


Gorst, John
Needham, Richard


Grant, Anthony (Harrow C)
Nelson, Anthony





Neubert, Michael
Steen, Anthony


Newton, Tony
Stevens, Martin


Normanton, Tom
Stewart, Ian (Hitchin)


Ogden, Eric
Stokes, John


Onslow, Cranley
Stradling Thomas, J.


Osborn, John
Tapsell, Peter


Page, John (Harrow, West)
Taylor, Robert (Croydon NW)


Page, Rt Hon Sir G. (Crosby)
Taylor, Teddy (S'end E)


Page, Richard (SW Herts)
Tebbit, Norman


Parkinson, Cecil
Temple-Morris, Peter


Parris, Matthew
Thomas, Rt Hon Peter


Patten, Christopher (Bath)
Thompson, Donald


Pawsey, James
Thorne, Neil (Ilford South)


Pink, R. Bonner
Thornton, Malcolm


Pollock, Alexander
Townend, John (Bridlington)


Porter, Barry
Townsend, Cyril D, (B'heath)


Price, Sir David (Eastleigh)
Trippier, David


Proctor, K. Harvey
Trotter, Neville


Raison, Timothy
van Straubenzee, W. R.


Rathbone, Tim
Vaughan, Dr Gerard


Rees, Peter (Dover and Deal)
Viggers, Peter


Rees-Davies, W. R.
Waddington, David


Renton, Tim
Wakeham, John


Rhodes James, Robert
Waldegrave, Hon William


Rhys Williams, Sir Brandon
Walker, B. (Perth )


Ridley, Hon Nicholas
Wall, Patrick


Ridsdale, Julian
Waller, Gary


Royle, Sir Anthony
Walters, Dennis


Sainsbury, Hon Timothy
Ward, John


St. John-Stevas, Rt Hon N.
Warren, Kenneth


Shaw, Giles (Pudsey)
Watson, John


Shaw, Michael (Scarborough)
Wells, John (Maidstone)


Shelton, William (Streatham)
Wells, Bowen


Shepherd, Colin (Hereford)
Wheeler, John


Shepherd, Richard
Whitelaw, Rt Hon William


Shersby, Michael
Whitney, Raymond


Silvester, Fred
Wickenden, Keith


Sims, Roger
Wilkinson, John


Smith, Dudley
Williams, D. (Montgomery)


Speller, Tony
Winterton, Nicholas


Spence, John
Wolfson, Mark


Spicer, Jim (West Dorset)
Young, Sir George (Acton)


Sproat, Ian



Squire, Robin
Tellers for the Ayes:


Stainton, Keith
Mr. Spencer Le Marchant and


Stanbrook, Ivor
Mr. Anthony Berry.




NOES


Ashton, Joe
Graham, Ted


Beith, A. J.
Hamilton, W. W. (C'tral Fife)


Bennett, Andrew (St'kp'f N)
Harrison, Rt Hon Walter


Brown, R. C. (N'castle W)
Haynes, Frank


Brown, Ronald W. (H'ckn'y S)
Holland, S. (L'b'th, Vauxh'll)


Buchan, Norman
Home Robertson, John


Campbell-Savours, Dale
Homewood, William


Canavan, Dennis
Hooley, Frank


Cocks, Rt Hon M. (B'stol S)
Howells, Geraint


Conlan, Bernard
Johnston, Russell (Inverness)


Cowans, Harry
Jones, Rt Hon Alec (Rh'dda)


Craigen, J. M.
Kaufman, Rt Hon Gerald


Crowther, J. S.
Kinnock, Neil


Cryer, Bob
Lamborn, Harry


Cunningham, Dr J. (W'h'n)
Leighton, Ronald


Dalyell, Tam
Lyons, Edward (Bradf'd W)


Davidson, Arthur
McCartney, Hugh


Davis, Clinton (Hackney C)
McDonald, Dr Oonagh


Deakins, Eric
McGuire, Michael (Ince)


Dobson, Frank
McWilliam, John


Dormand, Jack
Marks, Kenneth


Dubs, Alfred
Mellish, Rt Hon Robert


Dunn, James A.
Mikardo, Ian


English, Michael
Mitchell, Austin (Grimsby)


Evans, John (Newton)
Morris, Rt Hon A. (W'shawe)


Ewing, Harry
Morris, Rt Hon C. (O'shaw)


Field, Frank
Moyle, Rt Hon Roland


Ford, Ben
O'Halloran, Michael


Fraser, J. (Lamb'th, N'w'd)
O'Neill, Martin


Freeson, Rt Hon Reginald
Race, Reg


Freud, Clement
Richardson, Jo


Gilbert, Rt Hon Dr John
Roberts, Ernest (Hackney N)






Rooker, J. W.
Stott, Roger


Ross, Stephen (Isle of Wight)
Taylor, Mrs Ann (Bolton W)


Rowlands, Ted
Tinn, James


Shore, Rt Hon Peter
Wainwright, R.(Colne V)


Silkin, Rt Hon S. C. (Dulwich)
Welsh, Michael


Silverman, Julius
Whitehead, Phillip


Snape, Peter
Winnick, David


Spearing, Nigel
Tellers for the Noes:


Steel, Rt Hon David
Mr. George Morton and


Stewart, Rt Hon D. (W Isles)
Mr. Terry Davis.

Question accordingly agreed to.

Question put accordingly That the amendment be made:—

The Committee divided: Ayes 79, Noes 251.

NOES



Dykes, Hugh


Alexander, Richard
Egger, Tim


Ancram, Michael
Elliott, Sir William


Arnold, Tom
Emery, Peter


Aspinwall Jack
Eyre, Reginald


Atkins, Robert(Preston N)
Fairbairn, Nicholas


Atkinson, David (B'm'th,E)
Faith, Mrs Sheila


Baker, Kenneth(St.M'bone)
Farr, John


Baker, Nicholas (N Dorset)
Fell, Anthony


Banks, Robert
Fenner, Mrs Peggy


Beaumont-Dark, Anthony
Fletcher, A. (Ed'nb'gh N)


Bendall, Vivian
Fookes, Miss Janet


Benyon, Thomas (A'don)
Forman, Nigel


Benyon, W. (Buckingham)
Fraser, Rt Hon Sir Hugh


Best, Keith
Fraser, Peter (South Angus)


Bevan, David Gilroy
Fry, Peter


Biffen, Rt Hon John
Galbraith, Hon T. G. D.


Biggs-Davison, John
Gardiner, George (Reigate)


Blackburn, John
Gardner, Edward (S Fylde)


Btaker, Peter
Garel-Jones, Tristan


Bonsor, Sir Nicholas
Goodhew, Victor


Boscawen, Hon Robert
Gorst, John


Bottomley, Peter (W'wich W)
Grant, Anthony (Harrow C)


Bowden, Andrew
Greenway, Harry


Braine, Sit Bernard
Grieve, Percy


Bright, Graham
Griffiths, E.(B'y St. Edm'ds)


Brinton, Tim
Griffiths, Peter Portsm'th N)


Britten, Leon
Grylls, Michael


Brooke, Hon Peter
Gummer, John Selwyn


Brotherton, Michael
Hamilton, Hon A.


Brown, M. (Brigg and Scun)
Hampson, Dr Keith


Browne, John (Winchester)
Hannam, John


Bruce-Gardyne, John
Haselhurst, Alan


Bryan, Sir Paul
Hastings, Stephen


Buck, Antony
Havers, Rt Hon Sir Michael


Budgen, Nick
Hawkins, Paul


Butcher, John
Hawksley, Warren


Butler, Hon Adam
Heddle, John


Cadbury, Jocelyn
Henderson, Barry


Carlisle, John (Luton West)
Heseltine, Rt Hon Michael


Carlisle, Kenneth (Lincoln)
Hicks, Robert


Carlisle, Rt Hon M. (R'c'n)
Hogg, Hon Douglas (Gr'th'm)


Chalker, Mrs. Lynda
Hooson, Tom


Channon, Rt. Hon. Paul
Howell, Ralph (N Norfolk)


Churchill, W. S.
Hunt, David (Wirral)


Clark, Hon A. (Plym'th, S'n)
Hunt, John (Ravensbourne)


Clark, Sir W. (Croydon S)
Hurd, Hon Douglas


Clarke, Kenneth (Rushcliffe)
Jenkin, Rt Hon Patrick


Clegg, Sir Walter
Jessel, Toby


Cockeram, Eric
Johnson Smith, Geoffrey


Colvin, Michael
Jopling, Rt Hon Michael


Cope, John
Kershaw, Anthony


Corrie, John
King, Rt Hon Tom


Costain, Sir Albert
Kitson, Sir Timothy


Cranborne, Viscount
Knight, Mrs Jill


Crouch, David
Knox, David


Dean, Paul (North Somerset)
Lamont, Norman


Dickens, Geoffrey
Lang, Ian


Dorrell, Stephen
Langford-Holt, Sir John


Douglas-Hamilton, Lord J.
Latham, Michael


Dunn, Robert (Dartford)
Lawson, Nigel


Durant, Tony
Lennox-Boyd, Hon Mark





Lester Jim (Beeston)
Ridsdale, Julian


Lloyd, Peter (Fareham)
Royle, Sir Anthony


Loveridge, John
Sainsbury Hon Timothy


Luce, Richard
St. John-Stevas, Rt Hon N.


Lyell, Nicholas
Shaw, Giles (Pudsey)


McCrindle, Robert
Shaw, Michael (Scarborough)


Macfarlane, Neil
Shelton, William (Streatham)


MacGregor, John
Shepherd, Colin (Hereford)


MacKay, John (Argyll)
Shepherd, Richard


Macmillan, Rt Hon M.
Shersby, Michael


McNair-Wilson, M. (N'bury)
Silvester, Fred


McNair-Wilson, P. (New F'st)
Sims, Roger


McQuarrie, Albert
Smith, Dudley


Madel, David
Speller, Tony


Major, John
Spence, John


Marland, Paul
Spicer, Jim (West Dorset)


Marlow, Tony
Sproat, Ian


Marten, Neil (Banbury)
Squire, Robin


Mates, Michael
Stainton, Keith


Mather, Carol
Stanbrook, Ivor


Maude, Rt Hon Angus
Steen, Anthony


Mawhinney, Dr Brian
Stevens, Martin


Maxwell-Hyslop, Robin
Stewart, Ian (Hitchin)


Mayhew, Patrick
Stokes, John


Mellor, David
Stradling Thomas, J.


Meyer, Sir Anthony
Tapsell, Peter


Miller, Hal (B'grove)
Taylor, Robert (Croydon NW)


Mills, Iain (Meriden)
Taylor, Teddy (S'end E)


Mills, Peter (West Devon)
Tebbit, Norman


Miscampbell, Norman
Temple-Morris, Peter


Mitchell, David (Basingstoke)
Thomas, Rt Hon Peter


Moate, Roger
Thompson, Donald


Montgomery, Fergus
Thorne, Neil (Ilford South)


Moore, John
Thornton, Malcolm


Morris, M. (N'hampton S)
Townend, John (Bridlington)


Morrison, Hon C. (Devizes)
Townsend, Cyril D, (B'heath)


Morrison, Hon P. (Chester)
Trippier, David


Myles, David
Trotter, Neville


Neale, Gerrard
van Straubenzee, W. R.


Needham, Richard
Vaughan, Dr Gerard


Nelson, Anthony
Viggers, Peter


Neubert, Michael
Waddington, David


Newton, Tony
Wakeham, John


Normanton, Tom
Waldegrave, Hon William


Onslow, Cranley
Walker, B. (Perth )


Osborn, John
Wall, Patrick


Page, John (Harrow, West)
Waller, Gary


Page, Rt Hon Sir G. (Crosby)
Walters, Dennis


Page, Richard (SW Herts)
Ward, John


Parkinson, Cecil
Warren, Kenneth


Parris, Matthew
Watson, John


Patten, Christopher (Bath)
Wells, John (Maidstone)


Pawsey, James
Wells, Bowen


Pink, R. Bonner
Wheeler, John


Pollock, Alexander
Whitelaw, Rt Hon William


Porter, Barry
Whitney, Raymond


Price, Sir David (Eastleigh)
Wickenden, Keith


Proctor, K. Harvey
Wilkinson, John


Raison, Timothy
Williams, D.(Montgomery)


Rathbone, Tim
Winterton, Nicholas


Rees, Peter (Dover and Deal)
Wolfson, Mark


Rees-Davies, W. R.
Young, Sir George (Acton)


Renton, Tim



Rhodes James, Robert
Tellers for the Noes:


Rhys Williams, Sir Brandon
Mr. Spencer Le Marchant and


Ridley, Hon Nicholas
Mr. Anthony Berry.

Question accordingly negatived.

The First Deputy Chairman (Mr. Bryant Godman Irvine): Does the hon. Member for Stockport, North (Mr. Bennett) wish to move his amendment formally?

Mr. Andrew F. Bennett: Yes, Mr. Godman Irvine, formally.

Amendment proposed: No. 7, in page 1, line 15, leave out "7·75 per cent." and insert "7·95 per cent."—[Mr. Andrew F. Bennett.]

Question put, That the amendment be made:—

The Committee divided: Ayes 76, Noes 241.

Division No. 21]
[11.39 pm


AYES


Beith, A. J.
Howells, Geraint


Bennett, Andrew(St'kp't N)
Johnston, Russell (Inverness)


Brown, R. C. (N'castle W)
Jones, Rt Hon Alec (Rh'dda)


Brown, Ronald W. (H'ckn'y S)
Kinnock, Neil


Buchan, Norman
Lamborn, Harry


Campbell-Savours, Dale
Leighton, Ronald


Canavan, Dennis
Lyons, Edward (Bradf'd W)


Cocks, Rt Hon M. (B'stol S)
McDonald, Dr Oonagh


Conlan, Bernard
McGuire, Michael (Ince)


Cowans, Harry
McWilliam, John


Craigen, J. M.
Marks, Kenneth


Crowther, J. S.
Mellish, Rt Hon Robert


Cryer, Bob
Mikardo, Ian


Cunningham, Dr J. (W'h'n)
Mitchell, Austin (Grimsby)


Davidson, Arthur
Morris, Rt Hon A. (W'shawe)


Davis, T. (B'ham, Stechf'd)
Morris, Rt Hon C. (O'shaw)


Deakins, Eric
O'Halloran, Michael


Dobson, Frank
Race, Reg


Dormand, Jack
Richardson, Jo


Douglas-Mann, Bruce
Roberts, Ernest (Hackney N)


Dubs, Alfred
Rooker, J. W.


Dunn, James A.
Ross, Stephen (Isle of Wight)


English, Michael
Rowlands, Ted


Evans, John (Newton)
Shore, Rt Hon Peter


Ewing, Harry
Silkin, Rt Hon S. C. (Dulwich)


Field, Frank
Silverman, Julius


Ford, Ben
Snape, Peter


Fraser, J. (Lamb'th, N'w'd)
Spearing, Nigel


Freeson, Rt Hon Reginald
Steel, Rt Hon David


Freud, Clement
Stewart, Rt Hon D. (W Isles)


Gilbert, Rt Hon Dr John
Taylor, Mrs Ann (Bolton W)


Graham, Ted
Tinn, James


Hamilton, W. W. (C'tral Fife)
Wainwright, R.(Colne V)


Harrison, Rt Hon Walter
Welsh, Michael


Hattersley, Rt Hon Roy
Whitehead, Phillip


Haynes, Frank
Winnick, David


Holland, S. (L'b'th, Vauxh'll)
Tellers for the Ayes:


Home Robertson, John
Mr. George Morton and


Homewood, William
Mr. Hugh McCartney.


Hooley, Frank





NOES


Alexander, Richard
Buck, Antony


Ancram, Michael
Budgen, Nick


Arnold, Tom
Butcher, John


Aspinwall, Jack
Butler, Hon Adam


Atkinson, David (B'm'th,E)
Cadbury, Jocelyn


Baker, Kenneth(St.M'bone)
Carlisle, John (Luton West)


Baker, Nicholas (N Dorset)
Carlisle, Kenneth (Lincoln)


Banks, Robert
Carlisle, Rt Hon M. (R'c'n)


Beaumont-Dark, Anthony
Chalker, Mrs. Lynda


Bendall, Vivian
Channon, Rt. Hon. Paul


Benyon, Thomas (A'don)
Churchill, W. S.


Benyon, W. (Buckingham)
Clark, Hon A. (Plym'th, S'n)


Berry, Hon Anthony
Clark, Sir W. (Croydon S)


Best, Keith
Clarke, Kenneth (Rushcliffe)


Bevan, David Gilroy
Clegg, Sir Walter


Biffen, Rt Hon John
Cockeram, Eric


Biggs-Davison, John
Colvin, Michael


Blackburn, John
Cope, John


Blaker, Peter
Corrie, John


Bonsor, Sir Nicholas
Costain, Sir Albert


Boscawen, Hon Robert
Cranborne, Viscount


Bottomley, Peter (W'wich W)
Crouch, David


Bowden, Andrew
Dean, Paul (North Somerset)


Braine, Sir Bernard
Dickens, Geoffrey


Bright, Graham
Dorrell, Stephen


Brinton, Tim
Douglas-Hamilton, Lord J.


Brittan, Leon
Dunn, Robert (Dartford)


Brotherton, Michael
Durant, Tony


Brown, M.(Brigg and Scun)
Dykes, Hugh


Browne, John (Winchester)
Eggar, Tim


Bruce-Gardyne, John
Elliott, Sir William


Bryan, Sir Paul
Emery, Peter





Eyre, Reginald
Mills, Peter (West Devon)


Fairbairn, Nicholas
Miscampbell, Norman


Faith, Mrs Sheila
Mitchell, David (Basingstoke)


Farr, John
Moate, Roger


Fell, Anthony
Montgomery, Fergus


Fenner, Mrs Peggy
Moore, John


Fletcher, A. (Ed'nb'gh N)
Morris, M. (N'hampton S)


Forman, Nigel
Morrison, Hon P. (Chester)


Fraser, Peter (South Angus)
Myles, David


Fry, Peter
Neale, Gerrard


Gardiner, George (Reigate)
Needham, Richard


Gardner, Edward (S Fylde)
Nelson, Anthony


Garel-Jones, Tristan
Neubert, Michael


Goodhew, Victor
Newton, Tony


Gorst, John
Normanton, Tom


Grant, Anthony (Harrow C)
Onslow, Cranley


Greenway, Harry
Osborn, John


Grieve, Percy
Page, John (Harrow, West)


Griffiths, E.(B'y St. Edm'ds)
Page, Rt Hon Sir G. (Crosby)


Griffiths, Peter Portsm'th N)
Page, Richard (SW Herts)


Grylls, Michael
Parkinson, Cecil


Gummer, John Selwyn
Parris, Matthew


Hamilton, Hon A.
Patten, Christopher (Bath)


Hampson, Dr Keith
Pawsey, James


Hannam, John
Pink, R. Bonner


Haselhurst, Alan
Pollock, Alexander


Havers, Rt Hon Sir Michael
Porter, Barry


Hawkins, Paul
Price, Sir David (Eastleigh)


Hawksley, Warren
Proctor, K. Harvey


Heddle, John
Raison, Timothy


Henderson, Barry
Rathbone, Tim


Heseltine, Rt Hon Michael
Rees, Peter (Dover and Deal)


Hicks, Robert
Renton, Tim


Hogg, Hon Douglas (Gr'th'm)
Rhodes James, Robert


Hooson, Tom
Rhys Williams, Sir Brandon


Howell, Ralph (N Norfolk)
Ridley, Hon Nicholas


Hunt, David (Wirral)
Ridsdale, Julian


Hunt, John (Ravensbourne)
Royle, Sir Anthony


Hurd, Hon Douglas
Sainsbury, Hon Timothy


Jenkin, Rt Hon Patrick
St. John-Stevas, Rt Hon N.


Jessel, Toby
Shaw, Giles (Pudsey)


Johnson Smith, Geoffrey
Shaw, Michael (Scarborough)


Jopling, Rt Hon Michael
Shelton, William (Streatham)


Kershaw, Anthony
Shepherd, Colin (Hereford)


King, Rt Hon Tom
Shepherd, Richard


Kitson, Sir Timothy
Shersby, Michael


Knight, Mrs Jill
Silvester, Fred


Knox, David
Sims, Roger


Lamont, Norman
Smith, Dudley


Lang, Ian
Speller, Tony


Langford-Holt, Sir John
Spence, John


Latham, Michael
Spicer, Jim (West Dorset)


Lawson, Nigel
Sproat, Ian


Le Marchant, Spencer
Squire, Robin


Lennox-Boyd, Hon Mark
Stainton, Keith


Lester Jim (Beeston)
Stanbrook, Ivor


Lloyd, Ian (Havant &amp; W'loo)
Steen, Anthony


Loveridge, John
Stevens, Martin


Luce, Richard
Stewart, Ian (Hitchin)


Lyell, Nicholas
Stokes, John


McCrindle, Robert
Stradling Thomas, J.


Macfarlane, Neil
Tapsell, Peter


MacGregor, John
Taylor, Robert (Croydon NW)


MacKay, John (Argyll)
Tebbit, Norman


Macmillan, Rt Hon M.
Temple-Morris, Peter


McNair-Wilson, P. (New F'st)
Thomas, Rt Hon Peter


McQuarrie, Albert
Thompson, Donald


Madel, David
Thorne, Neil (Ilford South)


Major, John
Thornton, Malcolm


Marland, Paul
Tilley, John


Marten, Neil (Banbury)
Townend, John (Bridlington)


Mates, Michael
Townsend, Cyril D, (B'heath)


Mather, Carol
Trippier, David


Mawhinney, Dr Brian
Trotter, Neville


Maxwell-Hyslop, Robin
van Straubenzee, W. R.


Mayhew, Patrick
Vaughan, Dr Gerard


Mellor, David
Viggers, Peter


Meyer, Sir Anthony
Wakeham, John


Miller, Hal (B'grove)
Waldegrave, Hon William


Mills, Iain (Meriden)
Walker, B. (Perth )






Lloyd, Ian (Havant &amp; W'loo)
Sainsbury, Hon Timothy


Loveridge, John
St. John-Stevas, Rt Hon N.


Luce, Richard
Shaw, Giles (Pudsey)


Lyell, Nicholas
Shaw, Michael (Scarborough)


McCrindle, Robert
Shelton, William (Streatham)


Macfarlane, Neil
Shepherd, Colin (Hereford)


MacGregor, John
Shepherd, Richard


MacKay, John (Argyll)
Shersby, Michael


Macmillan, Rt Hon M.
Silvester, Fred


McNair-Wilson, P. (New F'st)
Sims, Roger


McQuarrie, Albert
Smith, Dudley


Madel, David
Speller, Tony


Major, John
Spence, John


Marland, Paul
Spicer, Jim (West Dorset)


Marten, Neil (Banbury)
Sproat, Ian


Mates, Michael
Squire, Robin


Mather, Carol
Stainton, Keith


Mawhinney, Dr Brian
Stanbrook, Ivor


Maxwell-Hyslop, Robin
Steen, Anthony


Mayhew, Patrick
Stevens, Martin


Mellor, David
Stewart, Ian (Hitchin)


Meyer, Sir Anthony
Stokes, John


Miller, Hal (B'grove)
Stradling Thomas, J.


Mills, Iain (Meriden)
Tapsell, Peter


Mills, Peter (West Devon)
Taylor, Robert (Croydon NW)


Miscampbell, Norman
Tebbit, Norman


Mitchell, David (Basingstoke)
Temple-Morris, Peter


Moate, Roger
Thomas, Rt Hon Peter


Montgomery, Fergus
Thompson, Donald


Moore, John
Thorne, Neil (Ilford South)


Morris, M. (N'hampton S)
Thornton, Malcolm


Morrison, Hon P. (Chester)
Tilley, John


Myles, David
Townend, John (Bridlington)


Neale, Gerrard
Townsend, Cyril D, (B'heath)


Needham, Richard
Trippier, David


Nelson, Anthony
Trotter, Neville


Neubert, Michael
van Straubenzee, W. R.


Newton, Tony
Vaughan, Dr Gerard


Normanton, Tom
Viggers, Peter


Onslow, Cranley
Wakeham, John


Osborn, John
Waldegrave, Hon William


Page, John (Harrow, West)
Walker, B. (Perth )


Page, Rt Hon Sir G, (Crosby)
Wall, Patrick


Page, Richard (SW Herts)
Waller, Gary


Parkinson,. Cecil
Ward, John


Parris, Matthew
Warren, Kenneth


Patten, Christopher (Bath)
Watson, John


Pawsey, James
Wells, John (Maidstone)


Pink, R. Benner
Wells, Bowen


Pollock, Alexander
Wheeler, John


Porter, Barry
Whitelaw, Rt Hon William


Price, Sir David (Eastleigh)
Whitney, Raymond


Proctor, K. Harvey
Wickenden, Keith


Raison, Timothy
Wilkinson, John


Rathbone, Tim
Williams, D.(Montgomery)


Rees, Peter (Dover and Deal)
Winterton, Nicholas


Renton, Tim
Wolfson, Mark


Rhodes James, Robert
Young, Sir George (Acton)


Rhys Williams, Sir Brandon



Ridley, Hon Nicholas
Tellers for the Noes:


Ridsdale, Julian
Mr. David Waddington and


Royle, Sir Anthony
Mr. Peter Brooke.

Question accordingly negatived.

Mr. Rooker: I beg to move amendment No. 10, in page 1, line 16, leave out subsection (3).
I suggest that the size of -be Conservative side of the Committee will reach 100 before we disappear. [HON. MEMBERS: "Rubbish."] It may be that some other Conservative Members have joined our proceedings, because, apart from the hon. Member for Somerset, North (Mr. Dean), no Conservative Member has so far taken part.
The amendment seeks to leave out subsection (3). It may be that Conservative Members do not know I do not intend to read them a lecture, but I should tell them that it puts am impost on widows and married women.
I have looked through the Conservative manifesto to see what was said about national insurance benfits, especially in regard to widows and married women. There was nothing. However, I found a quotation at the front by the nurse of the nation which said:
For me, the heart of politics is not political theory, it is people and how they want to live their lives.
It is signed by the Prime Minister. Given that since they came to power the Government have cut widows' benefit—slipped in through the Social Security (No. 2) Act earlier this year—I accept that we are now talking about a residual number of women who are still locked into the old married women's option scheme under the national insurance system. By and large, they are married women and widows. The Government now propose a 37 per cent. increase in their national insurance contribution. That is a large increase. It is larger in percentage terms than the one to which my hon. Friend the Member for Keighley (Mr. Cryer) referred previously. By any stretch of the imagination, a 37 per cent. increase takes a little beating, even under this Government.

Mr. Albert McQuarrie: Based on nothing.

Mr. Rooker: I do not think that the widows who are paying only 2 per cent.—[HON. MEMBERS: "Of what?"] Of their earnings. If hon. Members wish to intervene, I shall give way to the first hon. Member who rises.

Mr. W. R. Rees-Davies: Will the hon. Gentleman translate that into money terms and not percentages, because we might be able to understand it better?

Mr. Rooker: It is not my job to give answers from the Dispatch Box. That is the job of Ministers.
I want to ask the Minister a few questions. If she can answer them, we can reach a speedy conclusion to this debate. This is a quite narrow subject by any definition. The increase is from 2 per cent. to 2·75 per cent. [HON. MEMBERS: "How much is that?"] It depends on the earnings of the married woman. I should have thought that that was obvious. In an earnings-related scheme, the amount paid would depend on the earnings between the upper and lower income limits.
If the hon. and learned Member for Thanet, West (Mr. Rees-Davies) had been present earlier, he would probably have been able to work out examples for himself. For the purposes of this debate, however, it does not matter. The fact is that the rate is being changed for the first time in five years. It has been 2 per cent. since 1975. [Interruption.] One Conservative Member says that it is 2 per cent. of nothing, and another says that that is no reason for keeping it there for ever.
We have to look at what the women get for the payment. The number of national insurance benefits that a married woman or widow can obtain for paying the option is limited in the extreme. One is industrial injury benefit, but that is being cut by the Government in the Social Security (No. 2) Act. There is no evidence that more married women and widows paying the small stamp are suffering industrial injuries and creating an impost on the national insurance fund that requires this sort of


increase. If there is evidence, will the Minister give it to the Committee? Given the limited range of benefits, there has to be a rational reason for such a large increase. It could have been ¼ per cent., and we could have accepted that because it is in line with the figure we accept for the Government's forecast of increased unemployment. We want to know why there is such a large increase.
I do not know how many married women and widows are still in this twilight area. The numbers are declining. There must be fewer each year, because no woman now entering the labour market is allowed to opt for this small payment. How much extra money will the Government raise from this declining band of married women and widows by this increase in the option that they pay?
How much is involved? How much will be raised, and why is there such a large increase, bearing in mind that one of the major benefits to which these people are entitled is being cut? Subject to the Minister's reply, I shall leave the matter there.

Mr. Field: I am sorry that the Secretary of State is not in his place, because I wanted to address some questions directly to him, partly linked to ideas that he put forward before the election. I wanted to make that link not to taunt him but to show that some of those ideas, had they been followed through, might have stood him in good stead in answering the questions posed by my hon. Friend the Member for Birmingham, Perry Barr (Mr. Rooker).
Before the election, the Secretary of State was in favour of the idea of having what are called family impact statements in every Bill. In other words, just as we have a financial statement in the Bill, the Bill would carry a statement saying how families and different members of families would be affected by the changes that are proposed.
A number of measures that the Government have proposed and carried through during this Parliament have been favourable to single people and harmful to families. One of the interesting points about the national insurance scheme is that some aspects of it are favourable to women and children. Had we persuaded the Secretary of State to follow through his idea — his interest was second to none before the election—to preface all major Bills and departmental documents with impact statements, he would have been in a better position to answer the questions that my hon. Friend the Member for Perry Barr has raised. What sort of deal is the group that opted for the married women's option — a dying breed in the national insurance scheme—gaining from the scheme? Are the benefits that they receive so much greater than those of others in the scheme, particularly other women, that an increase in contribution was due?
It is sad that we do not have that information. We have been pincered into a debate in which we can consider only the distributional impact of increased contributions. The debate has been one-sided. We have considered only the groups on which contributions are bearing heaviest and most unfairly. If we had information about who benefits most from the national insurance scheme, we could make more sense of the argument about whether the increased contributions are fair.
12 midnight
What do the dying breed of women who have taken the so-called married woman's option get from the national

insurance scheme, compared with other groups of women who pay the full contribution? Is it so disproportionately unfair that it is reasonable to ask them to pay a 35 per cent. increase in their contribution? With that information, we could make better progress.
I hope that the Under-Secretary will tell her right hon. Friend the Secretary of State that if one of his comments before the election had borne fruit afterwards, so that we had family impact statements on major Bills and Government statements, we should be better able to answer the pertinent questions asked by my hon. Friend the Member for Perry Barr.

Miss Richardson: I was startled at the start of the debate to hear groans from the Government Benches and a Conservative Member saying "Oh, it is so boring." I wish that the married women and widows whom we are discussing and whose national insurance contributions are being increased by 37½ per cent. had heard that remark. When we get such comments from the Government Benches, I sometimes wish that our late-night debates were broadcast live. Many would be ear-openers.
We need to know how many married women still exercise the option and how many widows are involved. The numbers must be small, because married women are now paying the full stamp. Those whom we are discussing must inevitably be older women who are probably on low earnings. The increase from 2 per cent. to 2.75 per cent. will have a disproportionate impact on them because of their low wages.
The Secretary of State said on Second Reading that married women who opted for the lower-rate contribution were still getting a good bargain. I do not know whether that is the right way to describe it. We are instructing those women that they must pay more tax, and they will not regard that as a good bargain.
I have always wanted to get married women away from this optional small contribution because I did not feel that it was the right way for them to be treated—indeed, not the right way for the whole concept of married women's earnings, contributions and taxation to be treated.
I hope that the Under-Secretary of State will be able to give us some facts and figures which will enable us to judge a little more accurately than we are now able to do precisely what the problem is. She might also care to give us an averaging of what some of the earnings might be of married women who fall into this category.
We have been talking about the fact that married women on the whole, with very few exceptions, earn very much less than men, even when doing similar jobs, I am sorry to say. It would be interesting to know whether the hon. Lady has some figures which would enable us to judge the situation properly.

Mr. David Winnick: I support the amendment. It is particularly vindictive that this substantial increase of 37 per cent. should take place, for undoubtedly it will hit most those married women and widows who are among the poorest in the community. On Second Reading, the Secretary of State gave no justification for the increase, apart from the fact that there had been no increase since 1975. That was it—there has been no increase since 1975, so this sum of money should be raised.
When one compares the manner in which the richer sections of the community have been well rewarded by this


Government, it makes one extremely angry that again it is the poor, the elderly and all those who can least defend themselves who are being made the object of such an attack.
I am justified in pointing out again that in the Government's first Budget 37 per cent. of the tax reduction went to the top 7 per cent. in the community, while this year 14 per cent. went to the top 2 per cent. Those figures are hardly in dispute. If the Government's case is that there is really no alternative but to raise this sum of money, our question is simple. Why not take it from those who have been so well rewarded by the Government? Why take it from the poorest?
Does the Under-Secretary of State dispute that those who will be hardest hit by the clause are the sort of people we have been referring to? Will she deny that, in the main, they are the poorest amongst the wage earners? They contracted out because of their low incomes, because they wanted to retain more money, for the most obvious of reasons. It is therefore extremely unfair that this section of the community should be penalised.
Perhaps one of the reasons why the Tories are now in Government instead of the Labour Party, and with such a large majority, was the promise to reduce taxation. It would be wrong for me as a Labour politician to deny that the propaganda by the Tories worked very well. Many of my constituents who did not vote for me were perhaps swayed by the promise that under a Conservative Governments their taxes would be reduced. But when I ask people now "How much better off are you as a result of the tax cuts which have taken place?" they laugh. They are not better off at all.
At least some of my constituents have gained from the reduction in direct taxation, but it has been offset by the increase in indirect taxation, so there is no net gain. I sometimes try to persuade my hon. Friends that we should use this fact to show that a reduction in direct taxation does not help the average person.
I hope that the Under-Secretary will give us much more information. How many people are involved? Is it not true that they are mainly the elderly and the poorer sections of society? How much money will be raised as a result of what is proposed in the Bill? I hope that even at this late stage the Government will recognise the justice of the amendment and not oppose it.

Mr. Cryer: The Secretary of State justified the clause in a few lines of his Second Reading speech:
Married women and widows who have opted out of the full payment will pay the increased NHS contribution. They also contribute to the cost of the national insurance scheme, from which they benefit. The increases for them are a little higher, proportionately."—[Official Report, 8 December 1980; Vol. 995, c. 955.]
How right he was! The increase is 37 per cent. I wonder why.
The beginning of this debate was greeted by sneers and sniggers from the Conservative Members present, none of whom has justified the swingeing increase in tax. One of those to sneer was the chairman of European Ferries, currently receiving around £12,000 a year plus expenses as a Member. It hardly behoves anyone in that position to talk about married women and widows or to criticise the Opposition, who are resisting taxes that we believe are unfair.
I want to speak particularly about the imposition on widows. As a proportion of total earnings, in cash terms

the increase is relatively small, but we are talking about people who have low incomes anyway and for whom a 37 per cent. increase in national insurance contributions is a great deal. They have to budget from week to week and are not saving up to go abroad on holiday by means of European Ferries. They do not have a few thousand pounds in the bank. Instead of saying "Inflation is coming down", they say "Prices are still going up week by week." Their national insurance contribution is going up a good deal faster than prices in the shops, but prices are still going up by about 15 per cent. a year.

Mr. Winnick: My hon. Friend has spoken of the sort of people who will not be adversely affected. Does he agree that another group who have done well, and from whom the money could come, are those who have not paid their income tax as a result of the activities of Rossminster? It is they who have the money to contribute, instead of the elderly and poor, who are being attacked by the Bill.

Mr. Cryer: I was not saying that the elderly and poor would not feel the increase. I was pointing out that widows and married women would feel it, even though in absolute terms it might be thought relatively small. We are talking about people whose income is pledged up to the hilt week after week, for whom economic life is a struggle all the time. They do not have money to fall back on if they receive a bigger electricity bill or whatever.
When we were in Government, were there not many bleeding hearts on the Conservative Benches on the subject of widows? They stood shoulder to shoulder. They told us that widows were suffering and asked us what the Government were doing to improve the position of widows. We had it time after time. We still have a few bleeding hearts on the Conservative Benches. However, they do not show the little cross that they wear on their sleeves when they are in the Division Lobby. They slide away or vote for the Government. We know who they are. They were going to give the disabled, the pensioners and the widows so much assistance. Where are they now?

Mr. Dobson: On the Government Front Bench.

Mr. Cryer: Here is an impost on widows, hut where are the Conservative bleeding hearts?

Mr. Richard Page: Where are the hon. Gentleman's colleagues?

Mr. Cryer: If the hon. Gentleman wishes to intervene, let him stand up to do so and I will give way.

Mr. Page: In the previous Parliament that was absolutely true, but I did not notice your side coming into our Lobby when we were on about this. Let us see how many of your people will be voting here tonight. How many hundreds of the Labour Party will be defending the widows when it comes to the next Division? Come on.

Mr. Cryer: That was a garbled intervention without relevance or meaning. We are here tonight—

Mr. Page: "We"?

Mr. Cryer: There are enough Labour Members in the Chamber to demonstrate that we are not letting the Bill pass through the House of Commons—

Mr. David Waddington (Lord Commissioner of the Treasury): All 10 of you.

Mr. Cryer: The junior Tory Whip talks about 10 of us, but he knows that many Conservative Members will be kept in the House of Commons tonight to enable the Government to obtain the closures that they will need to force the Bill through the House of Commons. It is a legitimate effort by the Opposition to ensure that the Government cannot say that they obtained the Bill easily. We know that if the Liberals, the Scottish Nationals and all the other rag, tag and bobtail of the various parties on the Opposition Benches supported us in Divisions, the Tories would still win. We understand that. However, we are making sure that the Bill does not pass through the House of Commons easily. We are concerned that it represents an imposition on those who are least able to bear it.

Mr. Buchan: Does my hon. Friend agree that if Conservative Members are complaining about being kept up during bits of the night the fault is entirely that of the Government Front Bench?

Mr. Major: We are not complaining.

Mr. Buchan: They tried to smuggle the Bill through. That is what landed Conservative Members in this position. The fault lies on their Front Bench.

Mr. Cryer: If the Bill had passed through the House of Commons in an ordinary manner instead of being rushed through with all its stages having to be completed in one day and one night, it would have been dealt with in a more rational manner. It is entirely the fault of the Government Front Bench that the present procedures are being adopted. The Government are trying to force it through the House of Commons.
During the lifetime of the Labour Government, we had our arguments about widows. One of the improvements in benefit that was introduced during that period was due to the efforts of some Labour Back Benchers. My hon. Friend the Member for Ormskirk (Mr. Kilroy-Silk) was involved in organising a group of Back Benchers to obtain improved benefits for widows. That group voted for those improvements along with some Conservative and Liberal Members. Anyone who checks the record will find that the Labour Members on the then Government Benches were by no means the quiescent hacks that we see before us these days. That applied even with a narrow majority. The Conservative Members who were in the House of Commons during the administration of the previous Labour Government know that we were prepared on many occasions to vote if we felt that an issue was an important aspect of party policy. We were not prepared to adopt the hypocritical position that the Tories were using merely for political pretence.
I return to the position of widows. They will feel the imposition very keenly. It has been argued over the past few years that they have the same costs as a married couple. Heating and lighting cost the same. They cannot light or heat half a room. They have the same rates to pay. They feel particularly keenly that they are suffering as a result of existing legislation and could do with a better deal. Many other sections of the population consider that their lot should be improved, and any Government have to examine the priorities in the light of resources available. However, many widows feel particularly keenly that they are at a disadvantage because their partner is dead. They feel isolated, yet at the same time they have to bear costs which in the case of a married couple are shared.
The imposition on married women is unfair, but widows will consider that it is even more unfair on them because of their isolation and the fact that they have to bear the extra cost on only one income.
It is a particularly cruel imposition. I recall the representations, agitation and speeches made about widows when we were in Government. It is, therefore, clear that the Government are making an about-turn in introducing the 37 per cent. increase in widows' contributions, particularly when their main benefit as a result of the contribution is cut. On the one hand, the contribution is increased. On the other, if they are unfortunate enough to be in receipt of industrial injury benefit, they receive less. That is singularly unfair. How can the Minister justify that position? The action is still unjustified and unfair, even if only a small number are affected.
The Minister may say that only a tiny number is involved and that the Government are interested in the extent of the imposition, but even if an injustice affects only one person we should try to remedy it. Hon. Members on both sides make a very good living out of trying to remedy, individual injustices in the courts. Should we, therefore, let this taxation injustice go through without question? Of course not. I hope that my hon. Friends will support the amendment to delete the subsection.
The voting will be interesting. Even though this is an imposition on widows, I suspect that Government Members will flock to the Lobby—there has been a three-line Whip — as good as gold to support the Government. Alack, alas, whatever the Government do, all Conservative Members troop into the Lobby. Whatever we say is not likely to change their minds.

Mr. D. N. Campbell-Savours: Even the rebels.

Mr. Cryer: I do not believe that there are any rebels. There were four abstentions about 10 months ago, which was the beginning of a controlled explosion, but that whimpered out like a damp squib after about 14 dinners that were widely publicised. All the young men of the Conservative Party, newly elected, believed that they could have a great deal of influence on the Government. That has not happened. They have submitted to the three-line Whip to vote for the measure.
It seems to us that the measure is extremely unfair. It affects a section of the population that is least able to bear the increased tax. It reflects badly on the Government. Those who have had the best tax deal from them are people like the chairman of European Ferries, who has done very well. Conservative Members are all pretty well heeled, with good jobs outside the House as well as their good salaries as Members of Parliament. It is the height of injustice for them all to vote for this imposition on widows.

Mr. Race: These women who opted many years ago for a low rate of contributions and benefits did so in order to maximise their incomes. That was the prime defining factor of the group. By their approach they categorised themselves as low-paid, as needing every penny they could get from their wages. It is most likely that since they were low-paid they will remain low-paid, and this swingeing increase in contributions will undermine their incomes.
These women must be of advancing years because, as my hon. Friend the Member for Birmingham, Perry Barr (Mr. Rooker) explained, it is not now possible for new entrants into the labour force to opt for the lower level of contribution. That means that many of them will be approaching retirement, a lime when they least need to bear the burden of having their contributions increased more than those of any other group.
These older women are, for the most part, part-time workers with take-home pay of £25 to £30 a week. They are employed in the public sector or in the private sector as cleaners or domestics for people like the chairman of European Ferries. The Government must justify concentrating their attack on this group. We oppose all the contribution increases, but particularly this one, aimed as t is at this most defenceless group. For that reason, the Committee should throw out this obnoxious subsection and retain the 2 per cent. level of contributions.

Mr. Dobson: As my hon. Friend the Member for Wood Green (Mr. Race) has already said, this measure will bear most heavily on older women in part-time employment on low pay. All three of those characteristics generally go together. As has been pointed out already, the general trend of the economy is having a more damaging effect on the employment of women than it is even on the employment of men. A disproportionately high number of women work part-time. They tend to be the first to be pushed out of employment when companies shed employees. Considerable numbers are being pushed out of the public sector, almost as a deliberate part of the Government's policies.
As was pointed out when we discussed an earlier amendment, other women who suffer are those in the wage brackets round the minimum who are paying the full rate of national insurance contribution rather than opting for the reduced rate. I think that someone in the DHSS was Oven the task of looking to see whether there were any women that the Government were not getting at. He rushed in and said to the Secretary of State "Sir, Sir, I have found another little group. Perhaps we could damage them also. We could put them in our nasty, squalid, little Bill."
It is a nasty, squalid piece of legislation that is being peddled by the Secretary of State and his friends. This is an especially squalid little put of the squalid little Bill. It will not bring in a significant income for the Government. It will not even save very much money for the rich, whom the Government are trying to look after. It will not bring about the savings that the tax evasion companies have been bringing about for the well-off. It will not put the Government in a position in which they can make significant tax concessions to those who have already received tax concessions. It will not make much difference to the totality of the income or outgoings in this measure. It is as if someone went out for a vengeful look for people who had not been caught.
But those women have already been caught by the equally squalid Social Security (No. 2) Act 1980. The train benefit to which they are entitled is the industrial injury benefit, which the Act cut. This is another example of the way in which the Government, in their petty-minded, rotten way, are doing down any persons or groups who are not well-heeled, well-advised and, consequently, well able to protect themselves. It is the most disgraceful part of the Bill. It is not financially significant. I do not

suppose that the Chief Secretary to the Treasury rubbed his hands with glee at the thought of the amount of money that the Treasury would not have to find.
I wish that some Conservative Members would show a little rebellion every now and again. The only rebellions are those on the question of whether they will have a two-line Whip on a Private Member's Bill on this very day—as we have now reached Friday. I understand that they are feeling rebellious about that. I wish that they would feel rebellious about matters that are more important. I hope that they will rebel over this miserable little measure and show that they have a little heart left, instead of trooping into the Lobby after the Secretary of State.

Mr. Andrew F. Bennett: At the start of this short debate, there seemed to be a good many comments from the Conservative Benches on how much money was involved. The trouble with money is that it depends on how much of it one has and how much it is worth. The extra amount to be paid each week by someone earning £50 is 37½p. Many Conservative Members would not think that that is very much, but I remind them that it still buys a dog licence. Most of the people concerned, on low income, have to save up for many of their expenditures, and they begrudge having money taken away from them, apparently for no good reason except that the Government feel that they can be taxed. There can be no pretence that it is other than a tax. The group of people concerned get no benefit other than industrial injuries benefit from the national insurance system.
My hon. Friend the Member for Keighley (Mr. Cryer) put most of his emphasis on widows, and I spent a good deal of time trying to devise an amendment that would separate widows from married women. Eventually I gave up in despair, because it was very difficult to devise an amendment which would have any chance of being in order. Then I started to reflect that there was no justice in trying to separate the two. The variation in individual cases is startling. In many instances married women can be in just as difficult a financial position as widows. What is needed is to take into account their ability to pay when the tax is being imposed.
Consider first the woman who is widowed relatively early in life and who has contracted out at an early stage of her employment. She then finds that she has to go back to work. She has a fairly small widow's allowance. On her small income she will be counting every penny. That was the sort of case that my hon. Friend the Member for Keighley was citing. What about the married woman whose husband has left her? She finds that she has to go back to work because she has no maintenance coming in. Having contracted out, she can get no benefits. She may well be forced to accept low-paid work. She still has a considerable number of commitments—a house and so on.
What about the married woman with a sick husband? She finds the payment of what Conservative Members may regard as only a few pence to be a considerable imposition.
Even worse off than that woman is the married woman in a low-paid job whose husband is unemployed and has been unemployed for a long time, so that he has exhausted his benefit. If he were the only source of income, the family would be entitled to go on to supplementary benefit, but because the wife goes to work he will not qualify for it. So, although the wife is not entitled to any benefits—or virtually no benefits— as a result of her contributions, she is supporting a husband who has


exhausted his eligibility to benefits. I suggest that the woman in that category is at least as deserving as the widow.
Then there is the married woman whose husband is earning an average or above-average wage. The deduction from her income is of much less significance to that household.
One could go on with a whole series of examples, but they all make the point that this tax takes no account of the ability of the family to pay.

Mr. Dobson: Does my hon. Friend agree that if the Bill goes through several of the categories to which he has referred will be in the group referred to in the Conservative manifesto, where it speaks of far too many people who are
little or no better off at work than they are on social security"?

Mr. Bennett: I am aware that those are the categories to which the document was supposed to refer. Most of these people want to work, not just because they want to be independent but because they feel that there are many other benefits. They are just the people who will be the least likely to give up work if it is drawn to their attention that they might be better off in work than out of it. They are the people who have the least right to be clobbered by this increase.
We ought to be told the global sum that the Government hope to raise and how they justify imposing this increase on this group of people. Some of them will find it extremely difficult to cope with this increase. I suggest that the Minister should take away this part of the Bill and accept our amendment.

Mr. Campbell-Savours: I do not profess to have any great specialist knowledge of this area, but I thank my hon. Friend the Member for Stockport, North (Mr. Bennett) for informing me that this amendment was to be put to the Committee. I say that because it is an important amendment for hon. Members who do not specialise in this matter. Those who do not specialise are inclined to look at sensitive areas of legislation such as this and to speak on such matters when given the opportunity.
We have the pleasure this evening of having with us the Minister of State, Treasury, the hon. and learned Member for Dover and Deal (Mr. Rees). He may recall that during our debates on the Finance Bill some months ago he said that whenever sensitive issues came before us he would price them—for want of a better term—and on a number of occasions when controversial measures were to be put to the Committee he was kind enough to ensure that the information was available to us prior to the debate. If this area of debate has dragged on this evening, it may be because that kind of information has not been made available to us. It might have helped us if we had had such information, because it might have enabled us to establish, not only in the minds of my hon. Friends but perhaps also in the minds of Tory Members, what our priorities should be.
I recall the occasion during our debates on the Finance Bill when one Tory Member, who has now left the Chamber, moved an amendment that would have added £200 million to the public sector borrowing requirement. It was only when the Minister of State made the necessary information available to the Committee that we were able

to treat the amendment with the ridicule that it deserved and press our amendments to deal with far more sensitive and important areas of the Bill.
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If there is a particular reason why we on this side rise to speak on amendments such as these, it is that we see within such measures great injustices. It might be worth establishing what sorts of Members organising what sorts of surgeries are inclined to attract to those surgeries people who have problems of the kind to which my hon. Friends have referred tonight. I wonder whether the hon. Member for Huntingdonshire (Mr. Major), who was enjoying the debate earlier with a few laughs at the comments of my hon. Friends, could think back to the last surgery that he held. I am sure that at that surgery he was confronted with people who fall within the groups to which the amendment refers. I am sure he would agree that invariably at surgeries we are inclined to attract the lower-paid groups, because they have problems. Therefore, one would have thought that when hon. Members, having been confronted by such people at their surgeries, come to the House of Commons they would do their best to protect the interests of those people.
However, that does not happen. Conservative Members are very quick to allocate tens—indeed, hundreds—of millions of pounds to the better off—the more well-heeled—in society and are often inclined to discard the interests of those who have very little. That is a derogation of our function as Members of Parliament, because my understanding has always been that we come here to protect the underprivileged.

Mr. Major: Is the hon. Member aware that, as a Member of Parliment, he should seek to look, as I believe that my hon. Friends do, at the problems of the country in the round rather than in the specific? Does he not realise that if an hon. Member picked up every individual case irrespective of the general circumstances of the country and pleaded the sort of dishonest case that his hon. Friend the Member for Keighley (Mr. Cryer) did, the borrowing requirement—about which the hon. Gentleman was sarcastic—would soar to unprecedented levels? Would the hon. Gentleman care to comment on what the level of taxation on everyone, including widows, might be if the borrowing requirement were the £18 billion that the right hon. Member for Leeds, East (Mr. Healey) suggested and the minimum lending rate were reduced to 12 per cent.?

Mr. Campbell-Savours: To refer to a borrowing requirement of £18 billion and a reduction in MLR to 12 per cent. is to state only half of the argument. One aspect of debate which characterises this Parliament is that whenever hon. Members question where my hon. Friends stand in the economic debate they are very selective and choose areas which they think will help them in their argument. Conservative Members do not mention such matters as import controls and the alternative economic strategy which is being pressed upon the Government by my hon. Friends.

Mr. Major: Will the hon. Gentleman give way on that point?

Mr. Campbell-Savours: Yes.

The First Deputy Chairman: Order. We are talking about widows.

Mr. Campbell-Savours: I take your point, Mr. Godman Irvine as does the hon. Gentleman, I hope.
The hon. Member referred to the need to deal in the general rather than in the specific. An examination of the distribution of personal incomes between 1949 and the last year for which figures are available—1977—shows that the bottom 30 per cent. of income groups increased their share of all income by only ⅓ per cent. When one considers the legislation that the Government have introduced—

The First Deputy Chairman: Order. We are dealing not with the low-paid but with married women and widows.

Mr. Campbell-Savours: I should have thought that it was in order to refer to those who will suffer as a result of the Government's refusal to accept the amendment tabled by my hon. Friend the Member for Birmingham, Perry Barr (Mr. Rooker). I should have thought it in order to refer in passing to that group of people and their problems. Their share has increased by only one-third of 1 per cent. over a period of 28 years.
In the past year and a half, the Government have introduced two Finance Bills. It is clear that a massive redistribution is being made in favour of those who do not fall within that bottom 30 per cent. I remind the hon. Member for Huntingdonshire that the House is under an obligation. The amount of public expenditure involved is not vast. There will not be any draconian effect on the public sector borrowing requirement. Indeed, some of the amendments tabled by Conservative Members during discussion of the Finance Bill would have had a draconian effect. Such amendments would not have been of any benefit to my constituents.
Hon. Members would be unfair if they did not consider those who fall within these particular income groups. Income could be raised from several other sources. Only 10 days ago the Government made a statement to the effect that they would allocate a further £350 million to those who enjoyed stock relief. A marginal reduction in that amount—which would not have any great effect on the companies that claim stock relief—

The First Deputy Chairman: Order. The hon. Gentleman's remarks are not relevant to the amendment.

Mr. Field: On a point of order, Mr. Godman Irvine. Given that we are rushing through a Bill that seeks to raise taxation by more than £2 billion, is it not in order to ask where the Secretary of State is? Should he not be present at such deliberations?

The First Deputy Chairman: That is not a matter for the Chair, but it is for the Chair to ensure that hon. M embers discuss the specific amendment.

Mr. Campbell-Savours: You suggested, Mr. Godman Irvine, that my remarks were not in order. I suggest that they are in order. If the Government intend to use the increase from 2 per cent. to 2·75 per cent. as a means of raising revenue, I should have thought it in order to mention other ways in which the same amount of revenue could be raised.

The First Deputy Chairman: I am not sure whether the hon. Gentleman was in the Chamber earlier I have given a ruling on this subject.

Mr. Winnick: On a point of order, Mr. Godman Irvine. It is a perfect point of order. I refer to the absence of the Secretary of State. While I recognise—

The First Deputy Chairman: Order. The hon. Gentleman has been in the House long enough to know better than to proceed along those lines.

Mr. Winnick: Can we have an apology or an explanation for the right hon. Gentleman's absence?

Mr. Campbell-Savours: The House should reconsider the changes that have been introduced. A special case can be made for those who can ill afford to pay the Government's debts. The Government have clearly lost control of the economy because they are unable to reach the monetary targets that they originally set. They should not impose these costs on the underprivileged, who can ill afford to pick up the bill.

Mrs. Chalker: I was beginning to wonder when the moment would come for me to answer the many questions posed by Opposition Members.
One question was: how many married women are paying the reduced or opted-out payment? About 3½ million married women in employment pay the reduced payment. About a quarter of a million widows pay the reduced payment. A further quarter of a million women, not now in employment, who have been opted out from previous employments and are now in the immediate two-year post-employment period, are still eligible for reduced payments.
I was asked what money comes into the fund. The total is £47 million—not quite as small as some Opposition Members seemed to think—£31 million of which goes into the national insurance fund. The remaining £16 million will go into the National Health Service. If Opposition Members care to read the Government Actuary's report on the Bill, they will find many other useful figures.
We made clear in earlier debates—hon. Members who arrived after midnight will not have heard those debates, of course—that on the advice of the Government Actuary, working on estimates put to him by the Treasury, we must ensure that the national insurance fund remains in balance.
We have already discussed the full class 1 contributions. We are now discussing what happens to the reduced rate for married women and widows who for the past five years have been paying 2 per cent.
The hon. Member for Birmingham, Perry Barr (Mr. Rooker) made great play of the fact that the increase from 2 per cent. to 2·75 per cent. for women who are opted out was an increase of 37½ per cent. The hon. Gentleman failed to note that women who are opted out of the full contribution have always paid the National Health Service allocation. That is reflected as an increase of 0·25 per cent. in all the primary class 1 contribution rates. So of that 0·75 per cent. increase 0·25 per cent. is going direct to the National Health Service. The remainder is the general cost of the scheme from which married women and widows can benefit through additions to benefit for dependants and through industrial injuries benefit. They also benefit in the long term because they are making contributions to their retirement pensions.
When rates have not changed for some time, it may seem fair to ask "Why change them now?" Every speaker in the debate has missed one point. When the reduced rate was set in 1975, the standard class 1 rate was 5½ per cent.


In other words, the reduced rate was 3½ per cent. below that. Even after the increase now proposed, the difference will be 5 per cent.—that is, 2·75 per cent. compared with 7·75 per cent. It will be slightly greater than the 4·5 per cent.—that is, the difference between the old basic 2 per cent. contribution and the 6·5 per cent. contribution which applied from April 1978. That was when the Labour Government's legislation required married women to consider their position in the light of the new pension scheme. Therefore, the married women's option will now represent a better bargain than when they made their decision to pay at the lower rate.
The Government are in no way impervious to the problems that face many widows and people on low pay. As the hon. Member for Stockport, North (Mr. Bennett) said, a woman earning £50 a week would experience an increase of 37½p as a result of this part of clause 1.
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In view of the need to ensure that our national insurance fund remains in balance, and in order to make sure that the resources that we want for the NHS are available, I do not think that—at a better bargain than the Other increases—this is too much to ask of a group of the population that is by no means all in the categories so avidly described by Labour Members. I am sure that many will not begrudge contributing 37½p if they are on £50 a week.

Mr. Rooker: The Minister gave us the figures for which we asked. Perhaps she can give one more figure. She mentioned the 3½ million and the 250,000, the 250,000 being the widows. How much of the £47 million is attributable to the 250,000 widows?

Mrs. Chalker: I do not have my calculator with me, and I do not trust my mind at 1 o'clock in the morning, but I am quite sure that the hon. Gentleman and I can work out this figure.

Mr. Rooker: Is it proportional?

Mrs. Chalker: It is proportional, as far as I know. From what I have read, I cannot think of any reason to believe that it would be other than proportional. That was my immediate reaction, but I was trying to think whether there was anything that I should add. I believe that it is a proportional amount.

Mr. Dobson: It seemed to me that the Minister dismissed as virtually irrelevant and trivial the increase of 37½p a week for a woman earning £50 a week. Can she say what the sum was, or give us the total benefit in taxation, which such a woman would have received from the Government's changes in taxation that were introduced in their first Budget?

Question put, That the amendment be made:—

The Committee divided: Ayes 30, Noes 221.

Division No. 22]
[1.02 am


AYES


Buchan, Norman
Dobson, Frank


Campbell-Savours, Dale
Dormand, Jack


Canavan, Dennis
Dubs, Alfred


Cocks, Rt Hon M. (B'stol S)
English, Michael


Craigen, J. M.
Evans, John (Newton)


Crowther, J. S.
Ewing, Harry


Cryer, Bob
Field, Frank


Cunningham, Dr J. (W'h'n)
Freeson, Rt Hon Reginald


Davis, T. (B'ham, Stechf'd)
Graham, Ted





Haynes, Frank
Rowlands, Ted


Johnston, Russell (Inverness)
Spearing, Nigel


Leighton, Ronald
Welsh, Michael


McCartney, Hugh
Winnick, David


McDonald, Dr Oonagh



Race, Reg
Tellers for the Ayes:


Richardson, Jo
Mr. Walter Harrison and


Rooker, J. W.
Mr. Andrew F. Bennett.




NOES


Alexander, Richard
Grant, Anthony (Harrow C)


Ancram, Michael
Greenway, Harry


Aspinwall, Jack
Grieve, Percy


Atkinson, David (B'm'th,E)
Griffiths, E.(B'y St. Edm'ds)


Baker, Kenneth (St.M'bone)
Griffiths, Peter Portsm'th N)


Baker, Nicholas (N Dorset)
Grylls, Michael


Banks, Robert
Gummer, John Selwyn


Bendall, Vivian
Hamilton, Hon A.


Benyon, Thomas (A'don)
Hampson, Dr Keith


Benyon, W. (Buckingham)
Hannam, John


Berry, Hon Anthony
Haselhurst, Alan


Best, Keith
Hastings, Stephen


Bevan, David Gilroy
Havers, Rt Hon Sir Michael


Biggs-Davison, John
Hawkins, Paul


Blackburn, John
Hawksley, Warren


Blaker, Peter
Heddle, John


Boscawen, Hon Robert
Henderson, Barry


Bottomley, Peter (W'wich W)
Heseltine, Rt Hon Michael


Bowden, Andrew
Hicks, Robert


Braine, Sir Bernard
Hogg, Hon Douglas (Gr'th'm)


Bright, Graham
Hooson, Tom


Brinton, Tim
Howell, Ralph (N Norfolk)


Brittan, Leon
Hunt, David (Wirral)


Brotherton, Michael
Hunt, John (Ravensbourne)


Brown, M.(Brigg and Scun)
Hurd, Hon Douglas


Browne, John (Winchester)
Jenkin, Rt Hon Patrick


Bruce-Gardyne, John
Johnson Smith, Geoffrey


Bryan, Sir Paul
Jopling, Rt Hon Michael


Buck, Antony
Kershaw, Anthony


Budgen, Nick
King, Rt Hon Tom


Butcher, John
Kitson, Sir Timothy


Butler, Hon Adam
Knight, Mrs Jill


Cadbury, Jocelyn
Knox, David


Carlisle, John (Luton West)
Lamont, Norman


Carlisle, Kenneth (Lincoln)
Lang, Ian


Carlisle, Rt Hon M. (R'c'n)
Langford-Holt, Sir John


Chalker, Mrs. Lynda
Latham, Michael


Channon, Rt. Hon. Paul
Le Marchant, Spencer


Churchill, W. S.
Lennox-Boyd, Hon Mark


Clark, Hon A. (Plym'th, S'n)
Lester Jim (Beeston)


Clark, Sir W. (Croydon S)
Lloyd, Peter (Fareham)


Clarke, Kenneth (Rushcliffe)
Loveridge, John


Colvin, Michael
Luce, Richard


Cope, John
Lyell, Nicholas


Corrie, John
McCrindle, Robert


Costain, Sir Albert
Macfarlane, Neil


Cranborne, Viscount
MacGregor, John


Crouch, David
MacKay, John (Argyll)


Dean, Paul (North Somerset)
McNair-Wilson, P. (New F'st)


Dickens, Geoffrey
McQuarrie, Albert


Dorrell, Stephen
Madel, David


Douglas-Hamilton, Lord J.
Major, John


Dunn, Robert (Dartford)
Marland, Paul


Durant, Tony
Mates, Michael


Dykes, Hugh
Mather, Carol


Eggar, Tim
Maude, Rt Hon Angus


Elliott, Sir William
Mawhinney, Dr Brian


Emery, Peter
Maxwell-Hyslop, Robin


Eyre, Reginald
Mayhew, Patrick


Fairbairn, Nicholas
Mellor, David


Faith, Mrs Sheila
Meyer, Sir Anthony


Farr, John
Miller, Hal (B'grove)


Fell, Anthony
Mills, Iain (Meriden)


Fenner, Mrs Peggy
Mills, Peter (West Devon)


Forman, Nigel
Miscampbell, Norman


Fraser, Peter (South Angus)
Mitchell, David (Basingstoke)


Gardiner, George (Reigate)
Moate, Roger


Gardner, Edward (S Fylde)
Montgomery, Fergus


Garel-Jones, Tristan
Moore, John


Gorst, John
Morrison, Hon C. (Devizes)






Morrison, Hon P. (Chester)
Stainton, Keith


Myles, David
Stanbrook, Ivor


Neale, Gerrard
Steen, Anthony


Needham, Richard
Stevens, Martin


Nelson, Anthony
Stewart, Ian (Hitchin)


Neubert, Michael
Stokes, John


Newton, Tony
Stradling Thomas, J.


Normanton, Tom
Tapsell, Peter


Onslow, Cranley
Taylor, Robert (Croydon NW)


Osborn, John
Taylor, Teddy (S'end E)


Page, Rt Hon Sir G. (Crosby)
Tebbit, Norman


Page, Richard (SW Herts)
Thomas, Rt Hon Peter


Parkinson, Cecil
Thompson, Donald


Parris, Matthew
Thorne, Neil (Ilford South)


Patten, Christopher (Bath)
Townend, John (Bridlington)


Pattie, Geoffrey
Townsend, Cyril D, (B'heath)


Pawsey, James
Trippier, David


Pink, R. Bonner
Trotter, Neville


Pollock, Alexander
van Straubenzee, W. R.


Price, Sir David (Eastleigh)
Vaughan, Dr Gerard


Proctor, K. Harvey
Viggers, Peter


Raison, Timothy
Wakeham, John


Rathbone, Tim
Waldegrave, Hon William


Rees, Peter (Dover and Deal)
Walker, B. (Perth )


Rees-Davies, W. R.
Wall, Patrick


Renton, Tim
Waller, Gary


Rhodes James, Robert
Ward, John


Rhys Williams, Sir Brandon
Warren, Kenneth


Ridley, Hon Nicholas
Watson, John


Ridsdale, Julian
Wells, John (Maidstone)


Sainsbury, Hon Timothy
Wells, Bowen


St. John-Stevas, Rt Hon N.
Wheeler, John


Shaw, Michael (Scarborough)
Whitney, Raymond


Shelton, William (Streatham)
Wickenden, Keith


Shepherd, Richard
Wilkinson, John


Shersby, Michael
Winterton, Nicholas


Silvester, Fred
Wolfson, Mark


Sims, Roger
Young, Sir George (Acton)


Smith, Dudley



Speller, Tony
Tellers for the Noes:


Spicer, Jim (West Dorset)
Mr. David Waddington and


Sproat, Ian
Mr. Peter Brooke.


Squire, Robin

Question accordingly negatived.

Mr. Rooker: I beg to move amendment No. 11, in page 1, line 23, leave out '£3·40' and insert '£3·00'.

The Second Deputy Chairman (Mr. Richard Crawshaw): With this we may take amendment No. 12, in page 2, line 5, leave out '£5·15' and insert'£4·70'.

Mr. Rooker: The Committee will be pleased to hear that I shall be able to spend less time moving amendment No. 11 than I spent on amendment No. 10, but it is incumbent on me to explain why we dreamt up the figures of £3 and £4·70 in the amendments. Basically, we want to know why the Government have chosen the figures in the Bill.
1.15 am
Amendment No. 11 relates to the class 2 self-employed contribution, which is at present £2·50. We simply propose to increase that figure by 20 per cent. in line with average earnings. That is how we get the figure of £3. We want to know why such a large increase is proposed by the Government for this part of the self-employed contribution.
Amendment No. 12 relates to share fishermen. The hon. Member for Aberdeenshire, East (Mr. McQuarrie) is just about to walk out of the Chamber. Normally, when there is reference to fishermen, he rises to his feet. Perhaps he will be able to contribute to this debate. He may even be able to tell us whether we have share fishermen in the

EEC. I do not know whether that is so. I asked an hon. Gentleman who is a member of the Liberal Party and is now on the night sleeper, but he could not give an answer.
The present impost on share fishermen is £3·90. The Government propose a substantial increase, to £5·15. We have taken the 20 per cent. increase that we propose for the self-employed, which would give a rise of 50p on the £3·90 in the case of the share fishermen; we have then taken ¼ per cent. of average earnings—which takes us back to the unemployment contribution to the national insurance fund. That gives us 30p. We have not endeavoured to be more accurate than that. That gives us an 80p increase on £3·90. Hence we arrive at a figure of £4·70. These figures have not, therefore, simply been dreamt up out of thin air.
We could not understand why the Government proposed such large increases. In any event, it seemed the worst possible time to impose a further impost, above what was required by the increase in average earnings, upon those involved in the fishing industry. Hence these two amendments.

Mr. Patrick Jenkin: I regret that I cannot advise the Committee to accept these amendments, but, judging by the tone in which the hon. Member for Birmingham, Perry Barr (Mr. Rooker) moved them, they are perhaps more in the nature of probing amendments than an indication of the Opposition's policy.
The short answer is that the increases that are proposed for the class 2 contributions, the flat-rats contribution for the self-employed and the special rate for the share fishermen, are precisely what would be required to maintain the same relationship between the self-employed class 2 contributions and the combined employer and employee class 1 contribution.
The reduction in the Treasury supplement would account for about 30p of the 90p increase. The increase in the NHS allocation would account for a further 15p of that total, and the balance would be the appropriate share to go to the national insurance fund for the self-employed, relative to the contributions of employees. The effect of the amendment—the hon. Gentleman did not say whether this was the intention—would be to leave only the contribution to the fund and make the self-employed flat-rate contribution contribute nothing for the reduction of the Treasury supplement or for the Health Service.
If amendment No. 11 were carried, the loss of revenue would be about £16 million, but much more important than the amount of money involved would be the fact that it would mean that the relationship between class 1 and class 2 contribution rates would no longer be maintained. That would upset the relativity that has existed for a number of years.
The hon. Member may ask how class 2 and class 4 are fixed. The answer is that they have been fixed precisely according to the rules that were explained in the Government Actuary's report of 1977, in paragraphs 27 and 28. I shall not weary the Committee by reading out the paragraphs. I shall simply summarise them.
The rates for the self-employed are fixed on the total class 1 rate, which itself is set at a level adequate to keep the national insurance fund broadly in balance, taking account of the Treasury supplement. For the self-employed, this class 1 rate is abated to take account of the benefits for which they are not eligible—unemployment and industrial injuries benefits—and the earnings-related


components in the benefits. Nearly all the abatement is on account of pensions. It is based on the actuarial value of the pension rights forgone. This method was adopted by our Labour predecessors in 1977, and we see no reason to change it.
We have launched the promised investigation into the relative contributions and benefits to the self-employed. A paper was published in October, and that investigation is now under way. The increases do no more than maintain the existing relativity. They in no way prejudice the conduct or the possible outcome of the investigation.
I believe that we are treating the self-employed absolutely fairly, in exactly the same relationship as employers and employed. In those circumstances, the Committee may wish to reject the amendment.
I turn to amendment No. 12. The contributions and, therefore, the increases are somewhat larger for share fishermen, because they are based on the standard class 2 rate, but an addition is made in respect of the share fishermen's entitlement to unemployment benefit and industrial injuries benefit. The increase proposed in the Bill reflects the increases of 65p for inflation and 45p for the NHS and the effect of the Treasury supplement reduction, as for the normal class 2 rates, and 15p corresponding to the further ¼ per cent. on class 1, because they are eligible for unemployment benefit.
I hope that the Committee will agree that both increases are justified. They are entirely fair in relation to other groups whose contributions are being increased. I therefore advise the Committee to reject the amendments.

Mr. Buchan: The Secretary of State will not expect us to accept his proposition. We reject the 1 per cent. and the combined employer-employee ratio that he proposes in the rest of the Bill, and we reject them equally in relation to the groups in question. We are not being inconsistent; on the contrary, we are being consistent.
We heard a great deal before and during the election campaign about the Tory Party's affection for the self-employed. We have heard something about it since, but we have not seen much in the way of deeds. The right hon. Gentleman must know that the self-employed are among those who are being pressed hardest. Many small one-man businesses are going bust under the present Administration. The strain is as heavy upon the unemployed as it is on other working people. This is hardly the time to introduce the spurious 1 per cent. provision that the Government regard as an insurance levy. I know something about share fishermen, as does the hon. Member for Aberdeenshire, East (Mr. McQuarrie). I was in the hon. Gentleman's constituency a few weeks ago—

Mr. McQuarrie: The hon. Gentleman never told me.

Mr. Buchan: I was not there for political purposes. I was making a film for BBC on, among other things, fishermen.
As the hon. Gentleman knows, my family comes from the fishing folk of his constituency, I am sorry that they are being so badly represented. There is a problem facing fishermen. I declare an interest. I have no direct connection with fishing, but I have a sentimental interest in the industry and the people in it because of my family connections. The problem that they are facing was

occasioned by the Conservative Party taking the United Kingdom into the Common Market without any guarantees on fishing policy. The fishermen are now facing the consequence. Herring is being landed in Boulogne while the fishermen off our shores have to dump herring into the sea and waste it if they catch it accidentally instead of sprats.
The problem facing the fishermen is in line with that faced by the unemployed. That is another reason for not accepting the impost that the Government have introduced.

Mr. McQuarrie: The hon. Gentleman will remember that when he was Minister of State, Ministry of Agriculture, Fisheries and Food in a previous Labour Government he said that he could not understand why that Government had not properly renegotiated the common fisheries policy. Surely, he is as much to blame as anyone else for the lack of a common fisheries policy today. The hon. Gentleman should not blame the Conservative Party for the lack of a common fisheries policy. As for the representation of my constituency, Lord Boothby well represented Aberdeenshire, East and I have tried to emulate him since entering the House of Commons in fighting for the fishermen. I shall continue to do so.

Mr. Buchan: I seem to have gaffed a pike. I resigned from the Labour Government to whom the hon. Gentleman has referred over the Common Market. A great deal of my reason for doing so was their failure to include the fishing element in the renegotiations.

Mr. McQuarrie: The hon. Gentleman said that he was surprised that there were not proper renegotiations on the common fisheries policy.

Mr. Buchan: Of course I did. That was why I resigned. What news is the hon. Gentleman giving me? I resigned because that was not done, among other things. Therefore, I take no blame. The main responsibility lies with the agreement, the Treaty and the Act that took us into the Common Market without first securing—

The Second Deputy Chairman: Order. We are going wide of the subject that we are discussing. I hope that we have got these other matters out of our system for the moment.

Mr. Buchan: I recognise that we are travelling wide. However, the Committee wants to know my history and I am giving it. Those fishermen face a particular problem because of the common fisheries policy. Therefore, this is not the time to place a fresh impost on them. That was the simple point that I was making when, innocent as always, I was led off it by the subtleties of the hon. Member for Aberdeenshire, East.

Mr. Campbell-Savours: Will my hon. Friend explain, for the benefit of those of us with no great knowledge of the fishing industry, what share fishermen are? I assume that they have some share equity in their boats. Are they affluent people who can afford the contribution, or are they reeling under the effects of the Government's policies in other areas that we are not discussing?

Mr. Buchan: They are reeling under the effects of Government policy. There have been periods of relative affluence in the fishing industry, but it is facing major


difficulties now and for the future because of overfishing and failure to adopt proper conservation methods, partly because of the inhibitions placed on it by the EEC.
Share fishermen are men who go to sea, but they are not quite in an employee-employer relationship with the skipper or owner of the boat. Part of their earnings comes from their share in the catch. They are not only paid a wage. In fact, some are not paid a wage at all; they have a share of the profit of the boat as their payment. Fishermen, I am afraid, are highly individualist hunters, and they tend to prefer the chance of a haul—even a small haul—to a regular wage.

Mr. Campbell-Savours: Has my hon. Friend been able to assess the cost of the increase to the fishermen? What will the Exchequer gain by increasing the contribution.

Mr. Buchan: The latest figure that I have is £11 million for the self-employed and the share fishermen. I do not know what element of that £11 million will be lost if the amendment is carried. Perhaps the Minister can tell us.

Mr. Andrew F. Bennett: What happens to the share fishermen who, under Common Market regulations, have to put their catch back into the sea? If there is no catch, the share fisherman will get no income.

The Second Deputy Chairman: Order. The debate is ranging very wide of the mark. The hon. Gentleman will next be asking what happens if a fisherman goes out on a stormy day and has no catch.

Mr. Bennett: I was coming to the essential point, Mr. Crawshaw. Is the fisherman entitled to unemployment benefit, as it is supposed to be one of the privileges of the share fisherman? That is an important and relevant question.

Mr. Buchan: That question is better answered by the Government. However, the fisherman does not get a share if the catch is dumped overboard. The other day the equivalent of a £5,000 haul had to be dumped, when people in this country could have done with the valuable protein from the fish.

Mr. Campbell-Savours: My hon. Friend gave the figure by which he believed that the Exchequer would benefit. Perhaps the hon. Member for Aberdeenshire, East (Mr. McQuarrie) could intervene to tell us what effects he believes the increased contributions will have on fishermen in his constituency.

Mr. Buchan: I shall be generous, as always, if the hon. Gentleman wishes to intervene to defend his constituents.

Mr. McQuarrie: It must be remembered that share fishermen share in the catch, which can be small or large. The national insurance contribution will be based on the physical takings of each share fisherman on the catch. It is right that they enjoy a measure of unemployment benefit, again based on the amount of money they earn It s a question of the income from the catch. Fishermen can earn up to £2,000 on many occasions in a week or 10 days at sea. When, they come back, they pay a proportion of that. We are talking about the flat rate, and the increase on the flat rate will make the difference.

Mr. Buchan: I am surrounded by experts, but I am not sure that the hon. Gentleman is right. I understand that a flat figure rather than percentage applies. Perhaps the Secretary of State will confirm that.

Mr. Patrick Jenkin: The Committee seems to be getting into difficulty. We are concerned in amendments Nos. 11 and 12 with the flat-rate element of the self-employed national insurance contribution, amendment No. 12 relating to the special position of share fishermen, who, as my hon. Friend rightly said, are remunerated not by a normal wage or even a wage related to work but by a share or by a mixture of a wage and a share. They are, however, entitled to unemployment benefit, and in that way they are unlike the normal self-employed who are not entitled to unemployment benefit. That is why they pay a special, higher rate of contribution and why the increase, which is directly proportional, is, in money terms, bigger than for the self-employed.
The hon. Member for Renfrewshire, West (Mr. Buchan) asked me how much of the total sum for the self-employed would be attributable to share fishermen. We do not have up-to-date reliable information, but it would be unlikely to exceed £1 million. The principal issue here, therefore, is not the sum of money but maintaining the same relativity between the different categories of contributor when one is making a change such as that contained in clause 1. That is our justification for the increases for the self-employed and that special category, the share fishermen.

Mr. Buchan: It is for that reason that we shall oppose it. We do not accept the original impost, and we are being consistent in our opposition. I invited the hon. Member for Aberdeenshire, East to make a comment in the defence of his constituents. I am not sure that he has succeeded in doing that yet. No doubt the Buchan Observer would be glad to print his remarks if he were to support us. We would welcome him in our Lobby—indeed, we need him in our Lobby.
There remains the question of fish that is dumped. In such a case, the fishermen lose the benefit.

Mr. McQuarrie: I must take the hon. Gentleman to task on the question of the share fishermen. He should know as well as any hon. Member, because he comes from Buchan, that the fishermen there do not object to any increased contribution so long as the take from the share is coming in. Whether the Buchan Observer prints it or not, I am sure that my fishermen constituents will not object, if they can earn hard cash from good fish, to paying what the Government want.

Mr. Buchan: The hon. Gentleman is right in that my peole are notoriously generous. I am sure that they would not complain. Sometimes, however, we have to protect people from their own generosity. The House of Commons is magnificently empowered to do that. I do not doubt that all my family, past and present, would be willing honourably to serve society and pay the impost that is laid upon them, but I do not think that we should make the imposition upon them. They would pay just as willingly if the charge were a good deal lower.

Mr. Andrew F. Bennett: My hon. Friend still has not said what happens to the share fisherman whose catch has to be thrown away. He has no income from the catch. Is


he entitled to unemployment benefit or not? He will have been employed, but it will not have brought him any money.

Mr. Buchan: Perhaps we should send for the Secretary of State for Employment to answer this question for us. It is interesting to ask whether, after a three-day trip, if the fisherman lost his catch, that would count as three days' unemployment out of seven. What is the definition of unemployment in such a situation? I do not know, but my hon. Friend—

Mr. McQuarrie: I might be able to help the hon. Gentleman. The fishermen are not entitled to unemployment benefit on a three-day catch if it is thrown overboard.

Mr. Buchan: That is as I thought. The hon. Gentleman has confirmed it. The extra amount for unemployment is if a fisherman is not employed or participating in a share position. I hope that that answers the question raised by my hon. Friend the Member for Stockport, North (Mr. Bennett). If anyone wants to know anything more about the fishing industry, I shall be glad to help.

Mr. Field: My contribution is a question to the Secretary of State. I am genuinely confused about his explanation of why the amendments should be rejected. I am confused whether his arguments relate to the self-employed or to the share fishermen. Was he saying that the contribution for the self-employed would be worked out on the basis of the increases that employees and employers would pay? If so, how can that be a special rating when employers are not paying any increase in their rates? If the former is correct, is it not a departure from the way that the increases for the self-employed have been worked out, which in previous years were based not on the weighted increase of both employers and employees but on the lesser rate? The lesser rate was justified because the self-employed do not receive equity and benefits compared with employees for whom benefits are paid from contributions based on both employees and employers.

Mr. Patrick Jenkin: I hope that I can help the hon. Member for Birkenhead (Mr. Field). I am not expecting my remarks to be printed in the Wanstead and Woodford Guardian. I wish to draw attention to the details in the 1977 Government Actuary's report, in which he spelt out precisely how the contribution of the self-employed was calculated. Paragraph 27 states:
The Government have decided that after April 1978 the rates of contribution for the self-employed should be derived on lines similar to the rates for contracted-out employees, by making allowance for the average cost of self-employed contributors of providing for themselves benefits comparable to the new earnings-related additional components of pension to which the contributions of employees fully participating in the state scheme will be securing title.
Paragraph 28, the key paragraph, states:
On this approach the contribution rates for the self-employed will be obtained by making two deductions from the joint rate for employees who are not contracted-out; first, an adjustment to exclude that part of the contributions for employees which relate to the, mainly short-term, benefits under the present scheme for which the self-employed are not eligible and, secondly, a deduction to allow for the value of the new earnings-related benefits to which employees will be building up title after April 1978.
It obviously does not matter in what ratio the employees' and the employers' contributions stand to each

other, because it is the sum of the two—the joint contribution—that provides the basis on which the self-employed contribution is calculated, after making the deductions to which the Government Actuary's report refers. I beg to differ from the hon. Member for Birkenhead in his suggestion that the Bill creates any new position. On the contrary, we have gone to great lengths to ensure that we increase the self-employed contribution to maintain precisely the same ratio to the joint employer-employee contribution as has pertained hitherto. We have done that quite deliberately so as in no way to prejudice the investigation that is currently under way and which we promised at the last election.

Mr. Dobson: Does the Secretary of State recall his speech in Canton on 19 April? I mean Canton in Cardiff, not the one near the enterprise zone. At least, on that occasion the right hon. Gentleman had the courage to go to Cardiff. One understands from today's Daily Express that the Prime Minister is willing to go to Cardiff, but only if the chairman of the British Steel Corporation—

The Second Deputy Chairman: Order. The hon. Gentleman has already made this speech once tonight.

Mr. Dobson: The amendment refers to the self-employed. They are frequently referred to by the Secretary of State as small business men. I wonder whether he recalls his statement in Canton when he said:
The list of what we are now doing to encourage small businesses is a long and exciting one.
I wonder whether this exciting little measure was included in the long and exciting list of measures that he was introducing to stimulate small businesses. As in many other instances, this is simply another effort to increase the take from the natural insurance fund in order to try to keep down the general level of taxation.
The argument that has always been put forward with regard to small businesses is that the general level of taxation was penalising them. This is another example of simply shifting the burden from the general taxpayer on to the small self-employed person—the small business man. It is likely to damage those people to whom the Secretary of State's party apparently pays so much attention.

Question put, That the amendment be made:—

The Committee divided:Ayes 25, Noes 212.

Division No. 23]
[1.47 am


AYES


Bennett, Andrew(St'kp't N)
Freeson, Rt Hon Reginald


Buchan, Norman
Haynes, Frank


Campbell-Savours, Dale
Johnston, Russell (Inverness)


Cocks, Rt Hon M. (B'stol S)
Leighton, Ronald


Craigen, J. M.
McCartney, Hugh


Crowther, J. S.
Race, Reg


Cryer, Bob
Richardson, Jo


Cunningham, Dr J. (W'h'n)
Rooker, J. W.


Dobson, Frank
Welsh, Michael


Dormand, Jack
Winnick, David


Dubs, Alfred



English, Michael
Tellers for the Ayes:


Evans, John (Newton)
Mr. Walter Harrison and


Ewing, Harry
Mr. Terry Davis.


Field, Frank





NOES


Alexander, Richard
Baker, Nicholas (N Dorset)


Ancram, Michael
Banks, Robert


Atkinson, David (B'm'th,E)
Bendall, Vivian


Baker, Kenneth (St.M'bone)
Benyon, Thomas (A'don)






Benyon, W. (Buckingham)
Hunt, David (Wirral)


Berry, Hon Anthony
Hunt, John (Ravensbourne)


Best, Keith
Hurd, Hon Douglas


Bevan, David Gilroy
Jenkin, Rt Hon Patrick


Biggs-Davison, John
Johnson Smith, Geoffrey


Blackburn, John
Jopling, Rt Hon Michael


Blaker, Peter
Kershaw, Anthony


Boscawen, Hon Robert
Kitson, Sir Timothy


Bottomley, Peter (W'wich W)
Knight, Mrs Jill


Bowden, Andrew
Knox, David


Braine, Sir Bernard
Lamont, Norman


Bright, Graham
Lang, Ian


Brinton, Tim
Latham, Michael


Brittan, Leon
Le Marchant, Spencer


Brooke, Hon Peter
Lennox-Boyd, Hon Mark


Brotherton, Michael
Lester Jim (Beeston)


Brown, M.(Brigg and Scun)
Lloyd, Peter (Fareham)


Browne, John (Winchester)
Loveridge, John


Bruce-Gardyne, John
Luce, Richard


Bryan, Sir Paul
Lyell, Nicholas


Buck, Antony
McCrindle, Robert


Budgen, Nick
Macfarlane, Neil


Butcher, John
MacGregor, John


Butler, Hon Adam
MacKay, John (Argyll)


Cadbury, Jocelyn
McNair-Wilson, P. (New F'st)


Carlisle, Kenneth (Lincoln)
McQuarrie, Albert


Carlisle, Rt Hon M. (R'c'n )
Madel, David


Chalker, Mrs. Lynda
Major, John


Channon, Rt. Hon. Paul
Marland, Paul


Churchill, W. S.
Mates, Michael


Clark, Hon A. (Plym'th, S'n)
Mather, Carol


Clarke, Kenneth (Rushcliffe)
Maude, Rt Hon Angus


Colvin, Michael
Mawhinney, Dr Brian


Cope, John
Maxwell-Hyslop, Robin


Corrie, John
Mayhew, Patrick


Costain, Sir Albert
Mellor, David


Cranborne, Viscount
Meyer, Sir Anthony


Crouch, David
Miller, Hal (B'grove)


Dean, Paul (North Somerset)
Mills, Iain (Meriden)


Dickens, Geoffrey
Mills, Peter (West Devon)


Dorrell, Stephen
Miscampbell, Norman


Dunn, Robert (Dartford)
Mitchell, David (Basingstoke)


Durant, Tony
Moate, Roger


Dykes, Hugh
Montgomery, Fergus


Eggar, Tim
Moore, John


Elliott, Sir William
Morrison, Hon C. (Devizes)


Emery, Peter
Morrison, Hon P. (Chester)


Eyre, Reginald
Myles, David


Fairbairn, Nicholas
Neale, Gerrard


Faith, Mrs Sheila
Needham, Richard


Farr, John
Nelson, Anthony


Fell, Anthony
Neubert, Michael


Fenner, Mrs Peggy
Newton, Tony


Forman, Nigel
Normanton, Tom


Fraser, Peter (South Angus)
Onslow, Cranley


Gardiner, George (Reigate)
Owen, Rt Hon Dr David


Gardner, Edward (S Fylde)
Page, Rt Hon Sir G. (Crosby)


Garel-Jones, Tristan
Page, Richard (SW Herts)


Goodhart, Philip
Parkinson, Cecil


Gorst, John
Parris, Matthew


Grant, Anthony (Harrow C)
Patten, Christopher (Bath)


Greenway, Harry
Pattie, Geoffrey


Grieve, Percy
Pawsey, James


Griffiths, E.(B'ySt. Edm'ds)
Pink, R. Bonner


Griffiths, Peter Portsm'th N)
Pollock, Alexander


Grylls, Michael
Price, Sir David (Eastleigh)


Gummer, John Selwyn
Proctor, K. Harvey


Hamilton, Hon A.
Raison, Timothy


Hampson, Dr Keith
Rathbone, Tim


Hannam, John
Rees, Peter (Dover and Deal)


Haselhurst, Alan
Renton, Tim


Hastings, Stephen
Rhys Williams, Sir Brandon


Havers, Rt Hon Sir Michael
Ridley, Hon Nicholas


Hawkins, Paul
Ridsdale, Julian


Hawksley, Warren
Sainsbury, Hon Timothy


Heddle, John
Sr. John-Stevas, Rt Hon N.


Henderson, Barry
Shaw, Michael (Scarborough)


Hicks, Robert
Shelton, William (Streatham)


Hooson, Tom
Shepherd, Richard


Howell, Ralph (N Norfolk)
Shersby, Michael





Silvester, Fred
Trotter, Neville


Sims, Roger
van Straubenzee, W. R.


Smith, Dudley
Vaughan, Dr Gerard


Speller, Tony
Viggers, Peter


Spence, John
Wakeham, John


Spicer, Jim (West Dorset)
Waldegrave, Hon William


Sproat, Ian
Walker, B. (Perth )


Squire, Robin
Wall, Patrick


Stainton, Keith
Waller, Gary


Stanbrook, Ivor
Ward, John


Steen, Anthony
Warren, Kenneth


Stevens, Martin
Watson, John


Stewart, Ian (Hitchin)
Wells, John (Maidstone)


Stokes, John
Wells, Bowen


Stradling Thomas, J.
Wheeler, John


Tapsell, Peter
Whitney, Raymond


Taylor, Robert (Croydon NW)
Wickenden, Keith


Taylor, Teddy (S'end E)
Wilkinson, John


Tebbit, Norman
Winterton, Nicholas


Thomas, Rt Hon Peter
Wolfson, Mark


Thompson, Donald
Young, Sir George (Acton)


Thorne, Neil (Ilford South)



Townend, John (Bridlington)
Tellers for the Noes:


Townsend, Cyril D, (B'heath)
Mr. David Waddington and


Trippier, David
Lord James Douglas-Hamilton.

Question accordingly negatived.

The Second Deputy Chairman: Is a Division required on amendment No. 12?

Mr. Rooker: Yes.

Amendment proposed: No. 12, in page 2, line 5, leave out "£5·15" and insert "£4·70".—[Mr. Rooker.]

Question put, That the amendment be made:—

The Committee proceeded to a Division.

The Second Deputy Chairman: Order. As a result of a report that I have received, I propose to call the Division off and to put the Question again, the Tellers to be put in.

Question put, That the amendment be made:—

The Committee divided: Ayes 22, Noes 211.

Division No. 24]
[2.08 am


AYES


Bennett, Andrew(St'kp't N)
Haynes, Frank


Buchan, Norman
Johnston, Russell (Inverness)


Campbell-Savours, Dale
Leighton, Ronald


Cocks, Rt Hon M. (B'stol S)
McCartney, Hugh


Crowther, J. S.
Race, Reg


Cryer, Bob
Richardson, Jo


Dobson, Frank
Rooker, J. W.


Dormand, Jack
Welsh, Michael


Dubs, Alfred
Winnick, David


English, Michael



Ewing, Harry
Tellers for the Ayes:


Field, Frank
Mr. Terry Davis and


Freeson, Rt Hon Reginald
Mr. Walter Harrison.




NOES


Alexander, Richard.
Braine, Sir Bernard


Ancram, Michael
Bright, Graham


Atkinson, David (B'm'th,E)
Brinton, Tim


Baker, Kenneth(St.M'bone)
' Brittan, Leon


Baker, Nicholas (N Dorset)
Brooke, Hon Peter


Banks, Robert
Brotherton, Michael


Bendall, Vivian
Brown, M.(Brigg and Scun)


Benyon, Thomas (A'don)
Browne, John (Winchester)


Benyon, W. (Buckingham)
Bruce-Gardyne, John


Berry, Hon Anthony
Bryan, Sir Paul


Best, Keith
Buck, Antony


Bevan, David Gilroy
Budgen, Nick


Biggs-Davison, John
Butcher, John


Blackburn, John
Butler, Hon Adam


Blaker, Peter
Cadbury, Jocelyn


Boscawen, Hon Robert
Carlisle, Kenneth (Lincoln)


Bottomley, Peter (W'wich W)
Chalker, Mrs Lynda


Bowden, Andrew
Channon, Rt. Hon. Paul






Churchill, W. S.
Mawhinney, Dr Brian


Clark, Hon A. (Plym'th, S'n)
Maxwell-Hyslop, Robin


Clarke, Kenneth (Rushcliffe)
Mayhew, Patrick


Colvin, Michael
Mellor, David


Cope, John
Meyer, Sir Anthony


Corrie, John
Miller, Hal (B'grove)


Costain, Sir Albert
Mills, Iain (Meriden)


Cranborne, Viscount
Mills, Peter (West Devon)


Crouch, David
Miscampbell, Norman


Dean, Paul (North Somerset)
Mitchell, David (Basingstoke)


Dickens, Geoffrey
Moate, Roger


Dorrell, Stephen
Montgomery, Fergus


Douglas-Hamilton, Lord J.
Moore, John


Dunn, Robert (Dartford)
Morrison, Hon C. (Devizes)


Durant, Tony
Morrison, Hon P. (Chester)


Dykes, Hugh
Myles, David


Eggar, Tim
Neale, Gerrard


Elliott, Sir William
Needham, Richard


Emery, Peter
Nelson, Anthony


Eyre, Reginald
Neubert, Michael


Fairbairn, Nicholas
Normanton, Tom


Faith, Mrs Sheila
Onslow, Cranley


Farr, John
Osborn, John


Fell, Anthony
Page, Rt Hon Sir G. (Crosby)


Fenner, Mrs Peggy
Page, Richard (SW Herts)


Forman, Nigel
Parkinson, Cecil


Fraser, Peter (South Angus)
Parris, Matthew


Gardiner, George (Reigate)
Patten, Christopher (Bath)


Gardner, Edward (S Fylde)
Pattie, Geoffrey


Garel-Jones, Tristan
Pawsey, James


Goodhart, Philip
Pink, R. Bonner


Gorst, John
Pollock, Alexander


Grant, Anthony (Harrow C)
Price, Sir David (Eastleigh)


Greenway, Harry
Proctor, K. Harvey


Grieve, Percy
Raison, Timothy


Griffiths, B.(B'y St. Edm'ds)
Rathbone, Tim


Griffiths, Peter Portsm'th N)
Rees, Peter (Dover and Deal)


Grylls, Michael
Renton, Tim


Gummer, John Selwyn
Rhys Williams, Sir Brandon


Hamilton, Hon A.
Ridley, Hon Nicholas


Hampson, Dr Keith
Ridsdale, Julian


Hannam, John
Sainsbury, Hon Timothy


Haselhurst, Alan
St. John-Stevas, Rt Hon N.


Hastings, Stephen
Shaw, Michael (Scarborough)


Havers, Rt Hon Sir Michael
Shelton, William (Streatham)


Hawkins, Paul
Shepherd, Richard


Hawksley, Warren
Shersby, Michael


Heddle, John
Silvester, Fred


Henderson, Barry
Sims, Roger


Hicks, Robert
Smith, Dudley


Hooson, Tom
Speller, Tony


Howell, Ralph (N Norfolk)
Spence, John


Hunt, David (Wirral)
Spicer, Jim (West Dorset)


Hunt, John (Ravensbourne)
Sproat, Ian


Hurd, Hon Douglas
Squire, Robin


Jenkin, Rt Hon Patrick
Stainton, Keith


Johnson Smith, Geoffrey
Stanbrook, Ivor


Jopling, Rt Hon Michael
Steen, Anthony


Kershaw, Anthony
Stevens, Martin


Knight, Mrs Jill
Stewart, Ian (Hitchin)


Knox, David
Stokes, John


Lamont, Norman
Stradling Thomas, J.


Lang, Ian
Tapsell, Peter


Latham, Michael
Taylor, Robert (Croydon NW)


Le Marchant, Spencer
Taylor, Teddy (S'end E)


Lennox-Boyd, Hon Mark
Tebbit, Norman


Lester Jim (Beeston)
Thomas, Rt Hon Peter


Lloyd, Peter (Fareham)
Thompson, Donald


Loveridge, John
Thorne, Neil (Ilford South)


Luce, Richard
Townend, John (Bridlington)


Lyell, Nicholas
Townsend, Cyril D, (B'heath)


McCrindle, Robert
Trotter, Neville


Macfarlane, Neil
van Straubenzee, W. R.


MacGregor, John
Vaughan, Dr Gerard


MacKay, John (Argyll)
Viggers, Peter


McNair-Wilson, P. (New F'st)
Waddington, David


Madel, David
Wakeham, John


Marland, Paul
Waldegrave, Hon William


Mates, Michael
Walker, B. (Perth )


Maude, Rt Hon Angus
Wall, Patrick





Waller, Gary
Wilkinson, John


Ward, John
Winterton, Nicholas


Warren, Kenneth
Wolfson, Mark


Watson, John
Young, Sir George (Acton)


Wells, John (Maidstone)



Wells, Bowen
Tellers for the Noes:


Wheeler, John
Mr. Carol Mather and


Whitney, Raymond
Mr. Tony Newton.


Wickenden, Keith

Question accordingly negatived.

Mr. Rooker: I beg to move amendment No. 13, in page 2, line 7, leave out '£3·30' and insert '£2·90'.
We take the same view on voluntary contributions as we took on previous amendments, and I do not need to go into detail on the amendment. Basically, we have put a 20 per cent. increase on what is being paid.
We should like up-to-date information on how many voluntary contributions are paid. I once paid such contributions, but I was never caught in the trap of changing rates. Students sometimes pay contributions in a lump sum in order to gain a pension accrual for the future. What rate will they pay? Will it be the rate that is current when they make their back payment or will they have to pay the rate that was in force during the period for which they are buying stamps?

Mr. Race: My hon. Friend the Member for Birmingham, Perry Barr (Mr. Rooker) has raised an important matter. Students are often asked to catch up with contributions that they have not made because of their studies. Those in post graduate education in universities and colleges have to make up their contribution record in a lump sum.
At what rate will students have to make the lump sum payment? Will it be the rate at which contributions are levied when they make their payment, or will it be the rate that applied during the period when they should have been making contributions?
We are talking about substantial increases in such lump sums. The money will not be taken as weekly deductions from a wage packet. The amendment raises different problems from those that have arisen in our discussion of sometimes relatively small weekly amounts paid in increased national insurance employee contributions. The Government's proposals may have a detrimental effect on students and others.

Mr. Campbell-Savours: If students are unable to make contributions, when they take up work the DHSS informs them what contributions they must make in order to establish a full entitlement. I was abroad for some years in the 1960s and on my return I made arrangements with the Department to make up payments in line with the current provisions.
I do not understand why it is necessary to increase these contributions, because the payment would be made anyway, through supplementary benefits, if those concerned had insufficient pension entitlement at the age of 65. If the Bill goes through in its present form, the Government will have introduced a disincentive to people to make contributions.
I should have thought that it would be the Government's objective to ensure that people made as many contributions as possible, thereby relieving the State of the possibility that later in a person's life it might be required to pay supplementary benefits rather than pensions.

Mr. Andrew F. Bennett: I ask the Under-Secretary of State to give us a little more information. I presume that the hon. Lady will suggest that the reason for this increase and the figures proposed is that they are in line with and on the same scale as all the other figures. But there is a particular problem here.
We are looking at two groups of people. First, there are those who are out of the system at a particular time—now—and who want to make a contribution. Secondly, there are those who did not make a contribution in the past. In the case of those who for some reason do not make a contribution now, it is surely logical that they should be charged at whatever is the going rate. But those who, for example, did not make payments last year or some time in the year before should, if asked to make back payments, pay at the rate that applied at that time.
I hope that the hon. Lady can assure me that if a person is making a back payment he will pay at the rate that was current at the time his contribution was missing rather than at the rate pertaining now. It would be unfair to raise the repayment rate now, because of extra levels of unemployment, for those making back payments.

Mr. Race: As I recall it, people who have a contribution record which is deficient and which would affect their level of pensions or benefits in the future have a period of seven years in which to catch up on their contribution record. After that time, they are deemed not to want to make that contribution. Therefore, the point that my hon. Friend is making is a genuine one, because we could be talking about national insurance rates that were payable seven years ago and not last year alone.

Mr. Bennett: Some people are not able to make their back payments because of financial difficulty. Will the Under-Secretary of State tell us whether, under the uprated levels, their difficulties become greater or whether they are able to pay at the existing rates?
I come across a surprising number of people who opt out of the system. In several instances they are at very low income levels. It is marginal to them whether they are barter off trying to make up the payments. This sort of increase may well tip some of these people into not making up their contributions. The hon. Lady said earlier that it was important to encourage people to make contributions. Does she not agree that this son of increase is likely to discourage people from doing so?
I give the example of an artist who is not very successful at selling his pictures and may have virtually no income from that source for some period. Many people in that situation do occasional lecturing, which is their only source of income. They face problems in making up their contributions. This sort of increase may discourage them from trying to do so and cause them difficulties in the future.

Mrs. Chalker: This amendment is consequential upon amendment No. 11, which the Committee has declined to accept, but I will answer the questions asked upon it from the rather depleted Opposition Benches.
About 100,000 people pay class 3 contributions. I have been asked about the going rate for these voluntary contributions. The payment rate that is applicable is that for the period of the gap in the contributions record. Therefore, in the case of a student who can pay not up to seven years back but up to six years back the rate is the rate applicable where the gap in his contributions was.

Another person able to pay up to two years back would similarly pay the applicable rate for the gap in the contributions record.
The reason for raising the class 3 rate from its present level of £2.40 to £3.30 is exactly the same as the reason for the increases in the other rates. The contribution paid leads to entitlement to retirement pension. The class 3 rate contribution paid by voluntary contributors is at present l0p less than the class 2 rate. The class 3 rate proposed in the Bill maintains that relationship. The amendment would alter that arrangement and not be acceptable to the Government.

Question put, That the amendment be made:—

The Committee divided: Ayes 20, Noes 204.

Division No.25]
[2.30 am


AYES


Bennett, Andrew(St'kp't N)
Harrison, Rt Hon Walter


Buchan, Norman
Haynes, Frank


Campbell-Savours, Dale
Johnston, Russell (Inverness)


Cocks, Rt Hon M. (B'stol S)
Race, Reg


Cryer, Bob
Richardson, Jo


Davis, T. (B'ham. Stechf'd)
Rooker, J. W.


Dobson, Frank
Welsh, Michael


Dormand, Jack
Winnick, David


English, Michael



Ewing, Harry
Tellers for the Ayes:


Field, Frank
Mr. Hugh McCartney and


Freeson, Rt Hon Reginald
Mr. Ron Leighton.




NOES


Alexander, Richard
Dunn, Robert (Dartford)


Ancram, Michael
Durant, Tony


Atkinson, David (B'm'th,E)
Eggar, Tim


Baker, Kenneth(St.M'bone)
Elliott, Sir William


Baker, Nicholas (N Dorset)
Emery, Peter


Banks, Robert
Eyre, Reginald


Bendall, Vivian
Fairbairn, Nicholas


Benyon, Thomas (A'don)
Faith, Mrs Sheila


Benyon, W. (Buckingham)
Farr, John


Berry, Hon Anthony
Fell, Anthony


Best, Keith
Fenner, Mrs Peggy


Bevan, David Gilroy
Forman, Nigel


Biggs-Davison, John
Fraser, Peter (South Angus)


Blackburn, John
Gardner, Edward (S Fylde)


Blaker, Peter
Garel-Jones, Tristan


Bottomley, Peter (W'wich W)
Goodhart, Philip


Bowden, Andrew
Gorst, John


Braine, Sir Bernard
Grant, Anthony (Harrow C)


Bright, Graham
Greenway, Harry


Brinton, Tim
Grieve, Percy


Brittan, Leon
Griffiths, E.(B'y St. Edm'ds)


Brooke, Hon Peter
Griffiths, Peter Portsm'th N)


Brotherton, Michael
Grylls, Michael


Brown, M.(Brigg and Scun)
Gummer, John Selwyn


Browne, John (Winchester)
Hamilton, Hon A.


Bruce-Gardyne, John
Hampson, Dr Keith


Bryan, Sir Paul
Hannam, John


Buck, Antony
Haselhurst, Alan


Budgen, Nick
Hastings, Stephen


Butcher, John
Havers, Rt Hon Sir Michael


Cadbury, Jocelyn
Hawkins, Paul


Carlisle, Kenneth (Lincoln)
Hawksley, Warren


Chalker, Mrs. Lynda
Heddle, John


Channon, Rt. Hon. Paul
Henderson,, Barry


Churchill, W. S.
Hooson, Tom


Clark, Hon A. (Plym'th, S'n)
Howell, Ralph (N Norfolk)


Clarke, Kenneth (Rushcliffe)
Hunt, David (Wirral)


Colvin, Michael
Hunt, John (Ravensbourne)


Cope, John
Jenkin, Rt Hon Patrick


Corrie, John
Johnson Smith, Geoffrey


Costain, Sir Albert
Jopling, Rt Hon Michael


Cranborne, Viscount
Kershaw, Anthony


Crouch, David
Kitson, Sir Timothy


Dean, Paul (North Somerset)
Knight, Mrs. Jill


Dickens, Geoffrey
Lamont, Norman


Dorrell, Stephen
Lang, Ian






Latham, Michael
Ridsdale, Julian


Le Marchant, Spencer
Sainsbury, Hon Timothy


Lennox-Boyd, Hon Mark
St. John-Stevas, Rt Hon N.


Lester Jim (Beeston)
Shaw, Michael (Scarborough)


Lloyd, Peter (Fareham)
Shelton, William (Streatham)


Loveridge, John
Shepherd, Richard


Luce, Richard
Shersby, Michael


Lyell, Nicholas
Silvester, Fred


McCrindle, Robert
Sims, Roger


Macfarlane, Neil
Smith, Dudley


MacGregor, John
Speller, Tony


MacKay, John (Argyll)
Spence, John


McNair-Wilson, P. (New F'st)
Spicer, Jim (West Dorset)


McQuarrie, Albert
Sproat, Ian


Madel, David
Squire, Robin


Mates, Michael
Stainton, Keith


Mather, Carol
Stanbrook, Ivor


Maude, Rt Hon Angus
Steen, Anthony


Mawhinney, Dr Brian
Stevens, Martin


Maxwell-Hyslop, Robin
Stewart, Ian (Hitchin)


Mayhew, Patrick
Stokes, John


Mellor, David
Stradling Thomas, J.


Meyer, Sir Anthony
Tapsell, Peter


Miller, Hal (B'grove)
Taylor, Robert (Croydon NW)


Mills, Iain (Meriden)
Tebbit, Norman


Mills, Peter (West Devon)
Thomas, Rt Hon Peter


Miscampbell, Norman
Thompson, Donald


Mitchell, David (Basingstoke)
Thorne, Neil (Ilford South)


Moate, Roger
Townend, John (Bridlington)


Montgomery, Fergus
Townsend, Cyril D, (B'heath)


Moore, John
Trippier, David


Morrison, Hon C. (Devizes)
Trotter, Neville


Morrison, Hon P. (Chester)
van Straubenzee, W. R.


Myles, David
Vaughan, Dr Gerard


Neale, Gerrard
Viggers, Peter


Needham, Richard
Waddington, David


Nelson, Anthony
Wakeham, John


Neubert, Michael
Waldegrave, Hon William


Newton, Tony
Walker, B. (Perth )


Normanton, Tom
Wall, Patrick


Onslow, Cranley
Waller, Gary


Osborn, John
Ward, John


Page, Rt Hon Sir G. (Crosby)
Warren, Kenneth


Page, Richard (SW Herts)
Watson, John


Parris, Matthew
Wells, John (Maidstone)


Patten, Christopher (Bath)
Wells, Bowen


Pattie, Geoffrey
Wheeler, John


Pawsey, James
Whitney, Raymond


Pink, R. Bonner
Wickenden, Keith


Pollock, Alexander
Wilkinson, John


Price, Sir David (Eastleigh)
Winterton, Nicholas


Proctor, K. Harvey
Wolfson, Mark


Raison, Timothy
Young, Sir George (Acton)


Rathbone, Tim



Rees, Peter (Dover and Deal)
Tellers for the Noes:


Renton, Tim
Lord James Douglas


Rhys Williams, Sir Brandon
Hamilton and


Ridley, Hon Nicholas
Mr. Robert Boscawen.

Question accordingly negatived.

Mr. Rooker: I beg to move amendment No. 14, in page 2, line 10, leave out paragraph (a).

The Second Deputy Chairman: With this we may take the following amendments:
No. 15, in page 2, line 14, leave out '£3,150' and insert '£3,200'.
No. 16, in page 2, line 15, leave out paragraph (c) and insert—
'(c) the words "and does not exceed £8,300" shall be omitted.'.

Mr. Rooker: Let me at the outset say that amendment No. 16 seems pretty meaningless. In our drafting, or in its transmission to the Table Office, there has been an omission. It is technically deficient.

Mr. Andrew F. Bennett: If my hon. Friend looks at subsection (7) he will see that it reads:

In sections 9(2) and 10(1) of the principal Act".
If one relates the amendment to that, it makes sense.

Mr. Rooker: The amendment did not make sense to me when I originally read it, and I have not been able to make sense of it in the past couple of hours. However, my hon. Friend is probably right. I am not throwing the amendment away, but I am not happy about the drafting, and I shall not be too upset if the Government criticise it.
The main thrust of the amendments is to ease the burden on the self-employed, which is no contradiction coming from the Labour Benches. As the Secretary of State is aware, there was considerable dispute with the Government when the proposal was introduced in 1975. Originally, the figure was 8 per cent., and there was a major row over getting it changed.
We do not see why the self-employed should be subjected to these imposts. Most of the amendments have related to the 1 per cent. increase. I suspect that the Government's answer to this point, and in relation to the figures that they have used for the earnings band in which the self-employed pay their earnings-related contribution, will be more or less the same as their answers on the previous three amendments.
Did the Government take into account the possible consequences of the implementation of the Green Paper on sickness benefits? The self-employed are aggrieved about the proposal, as the Minister is well aware. We do not have a legislative proposal in front of us, but there will probably be a further change in the percentage rate for the self-employed, possibly in the same financial year as the legislation on sickness benefit, which the Government intend to put through this Session, according to the Queen's Speech. Will there be two changes in the rate for the self-employed in one year?
I can imagine that most big employers will be able to cope with the rate changes just as they can cope with the various tax changes, but I suspect that there will be a considerable outcry from the self-employed if they are asked to accept two changes in the rates, especially when the reason for the second change could have been foreseen when the first change was put through the House—that is, tonight.

Mr. Cryer: The amendment would delete the 0·75 per cent. increase in contributions on earnings and would raise the lower limit to above £3,200. I take it that amendment No. 16 would raise the upper limit, so that the overall effect of the amendments would be to improve the position by relating contributions by the self-employed to a lower level of earnings. I remember that when just over a million people were unemployed under the Labour Government the National Federation of Self Employed and Small Businesses Ltd. claimed that if only a few modifications were made to the Employment Protection Act its members could each take on one additional employee. Since there were around a million self-employed sole proprietors, it believed that it would solve the unemployment problem. That has clearly not happened. I never thought that it was realistic. A very large number of sole proprietors are literally just that. They are employed not in manufacturing industry but in shops, for example. Many of them could not sustain an additional employee.
The self-employed—the small businesses—are facing difficulties. This proposal will create even more difficulty


for them. The burden will clearly increase. If the Government are serious in their claim that small firms—sole proprietors as well as incorporated enterprises—will provide jobs, they must accept that this provision will be more a disincentive than an incentive for that to happen.
These firms are facing the burden of high interest rates. The wife of a self-employed electrician contacted me last week to explain that she is having to pay more for the stock that her husband has to keep if he is to undertake the wide variety of jobs he is called upon to perform. Her husband is experiencing difficulty because he has a big overdraft. The high level of interest rates means that he faces a heavy outlay in that direction just to keep the firm ticking over.
The electrician in question is a Labour supporter, but I do not argue the case from a sectarian point of view. I suspect that the bulk of self-employed people voted Conservative at the last election. I doubt that they would do so now, but their inclination then was to favour the Conservative Party because it said that their enterprise would be rewarded. The Labour Government produced restrictive legislation on the employment of individuals, which they did not like. I did not agree with them. Clearly, they will not be impressed, to say the least, by these additional contributions.
I well, recall when the previous Labour Government increased contributions for the self-employed. The increase was first set at 8 per cent. and then changed to 5 per cent. That caused a considerable amount of controversy. Members of the National Federation of Self Employed and Small Businesses Ltd had a certain affinity with the view that the Labour Government were doing it because they were not sympathetic or understanding. I am sure that they will say exactly the same about the present Government—namely, that they are not a sympathetic or understanding Government because they are increasing the national insurance contributions.

Mr. Campbell-Savours: My hon. Friend said he thought that the small business lobby had pressured the Government. The Conservative Party 1978 guide refers to the pressure exerted through the Conservative Party by the small business organisations on the Labour Government. In the guide, the Conservative Party claimed the credit for the reduction from 8 per cent. to 5 per cent. It is there in black and white. If I am called, I shall quote from it.

Mr. Cryer: The reduction from 8 per cent. to 5 per cent. was claimed as a victory for the federation through its lobbying of the Government. Everyone wanted to get on to that bandwagon. The Labour Government of the day made the reduction as a demonstration of their genuine intention to help small firms.
I mention the matter because I think that the Secretary of State would agree that his Green Paper "Income During Initial Sickness: A New Strategy" has not met with warm enthusiasm from the federation. It has produced a critical document about his proposals. Paragraph 30 states:
It is the Government's intention that employers as a whole should be; compensated for meeting these extra costs and that such compensation, to the extent that it did not take the form of direct reimbursement to employers … should be through a once-for-all reduction in their contribution liability. This reduction, it is estimated, would be of the order of one-half of a percentage point.
The Government propose that employers should have the burden of administering sick pay during the first eight

weeks. They propose that that additional burden should be compensated by a reduction in the employer's national insurance contribution of one-half of a percentage point.
The self-employed could legitimately argue that the sickness scheme, which they do not like, is being imposed upon them and that they are being offered some very modest inducement to carry it out, after having had to face the burden of an increase in their own national insurance contributions. It is a case of taking with one hand and giving back a proportion with the other. That is the view that they will take. I should be grateful to hear the Secretary of State's comments about the relationship of those increases to the Government's proposals for a reduction in the employer's contribution under the sickness scheme.
I am opposed to the sickness scheme. I do not want to delve into it in any detail, but I am opposed to it. It is a wrong idea. Small firms will suffer, as will their employees, under the scheme. There is an indirect link, because my argument about taking with one hand and giving back a proportion with the other will be raised. I should like to hear the Secretary of State's comments on that position.
The Labour Government gave rather more assistance to small firms than has been generally recognised. We included among those small firms the self-employed and the sole proprietors, who often employ two, three or four people, although they call themselves self-employed. There are the plumbers, the electricians, the decorators, the shopkeepers, the restaurant owners and so on. We have from time to time instituted provisions for giving them assistance by means of the small firms; advisory service, the small firms counselling service and so on, which were instituted by the Labour Government on a nationwide basis. Those services proved to be of great help. The take-up has been high. The test of their helpfulness has been the reaction of the small firms themselves, not our own assessment.
It is reasonable to suggest that the self-employed will find the charges a burden which will inhibit their efforts to develop their businesses and to create jobs. We know that in today's economic climate it is the small firms that are being clobbered most of all. They are facing Slighter interest charges; they are facing difficulties with rate burdens. Local authorities, because of Government action, are desperately trying to maintain services and in some instances have had to raise a supplementary rate levy. That again is a difficulty. Now, the small firms are being faced with this additional charge on their national insurance contributions.
The big firms are also experiencing difficulties due to the Government's policy of high interest rates, the high exchange rate of the pound and cuts in public expenditure, so that they in turn are having to cut back on the smaller firms which supply them with components or services. Where a local authority cuts back on public expenditure, it is sometimes the small firms, the self-employed, who are finding that the contracts are being brought to an end.
The Government have a moratorium on new council house building contracts, new public sector building contracts. In England and Wales, 92 per cent. of council houses are built not by direct works departments but by private enterprise contractors. I have no doubt that there will be some self-employed or sole proprietor firms among


that number. In Scotland, the figure is even higher—98 per cent. of the council houses are built by private enterprise firms.
The Government are inflicting a burden on the very people who, I imagine, in many instances supported the Conservative Party at the last general election. They have imposed this additional insurance charge, together with the high interest rates. There are the diminution in business and all the problems which the present crisis and recession are presenting to everybody. There is also the new sickness scheme. We know that it has not yet been instituted, but there is a Green Paper and the matter is causing uncertainty. It is causing a lack of confidence in the small business sector, among both employers and employees. I hope that it will never come into existence. Nevertheless, it is another matter of concern, and the insurance increase will be a yet further matter of concern.
What we have suggested is a fairer application of the burden. It can be reasonably stated to be a better and fairer arrangement than the Secretary of State's. Therefore, I hope that it will have the support of my hon. Friends. I also hope that it may have support from the Conservative Members who are here tonight to vote in great numbers for increased insurance contributions for the self-employed.
3 am
I have been to a couple of meetings of the National Federation of Self Employed and Small Businesses Ltd., one a big one at the Central Hall in Westminster, where I suppose there were about 2,000 people present, and the other the annual meeting at Blackpool, where I suppose there were 200 or 300 present. I was then a Labour Minister, and I suppose that the welcome that they gave me was not wildly enthusiastic. In fact, it was a bit wild, but not enthusiastic. The situation has probably changed. There are not many Labour supporters amongst their numbers—but I think that the number is growing—and I can therefore say that we are not doing this from a partisan point of view but are putting forward a case that a fairer position can be achieved, and we have tried to achieve a fairer position in their national insurance contributions.
There is a certain amount of irony and amusement in the Conservatives going into the Lobby on the principle of an increase in contributions by the self-employed, the sector which, during the Labour Government's period of office, they said was inhibited by burdens and charges and that if only they could get into office the energies of all those people would be released. Well, all their energies are being released — in the bankruptcy courts, in evergrowing numbers, I regret to say. It is a sad business that so many people should be in the dole queue and so many should be facing the trauma of bankruptcy, because it must be an enormous problem and sense of failure to get into that situation, even though it may not be the fault of the self-employed. Therefore, I urge even some of the Conservative Members here tonight to consider either abstaining or voting for these improvements.

Mr. Rooker: One reason for our complaint about the Bill being bounced through the House is that no one, so far as I am aware, has had adequate time for consultation. Perhaps my hon. Friend will invite Tory Members, or the Minister, to say what consultations the Government have had with the self-employed over this measure.

Mr. Cryer: I am grateful to my hon. Friend for that intervention, because I think that the federation, now that it has got over its teething problems, provides information for its members. It has produced a document on "Income During Initial Sickness: A New Strategy", of which it has kindly sent me a copy. I disagree with many of the points made by the federation, but it is a comprehensive document that represents its point of view. I should have thought that it would have been reasonable for the Secretary of State to have delayed the Bill a little so that the federation, which is specifically affected, could have got its comments together.
The Secretary of State does not know, but the federation might have been glowing in its praise of the right hon. Gentleman. It might have said that it wanted public expenditure to be curtailed—I imagine that that is the federation's view, although I do not know—and that this was the best way of doing it, that it was willing to make this contribution and that it was happy to put forward that point of view and support the Government. On the other hand, the federation might well have been critical of the Government and said that there were alternative means of raising this amount of revenue. I shall be interested to know the total sum that the Government envisage in a full year. I know that they cannot be completely accurate—because many of the people will be bankrupt by the end of a further full year of Conservative Government—but some sort of estimate would be of use to the Committee, and we look forward to that.
My hon. Friend is right in saying that in getting legislation through the House it is important that we provide people with the opportunity to give us their comments, particularly for a Committee stage. I well recall saying to members of the National Federation of Self Employed and Small Businesses, Ltd., when they were critical of legislation—I accept that they were critical of some of our legislation—that Parliament represented a democratic process. We must recognise that some of the members of the federation were not too enamoured of democratic endeavour. They said "You talk too much. You should get it done and get it out of the way." I explained to them that in the parliamentary process one of the possibilities was that in Committee on a Bill people and organisations could put forward ideas and hon. Members could table amendments for debate. In this case there has not been time to give full effect to that process. We have tabled amendments. It would have been proper to give representatives of the self-employed a breathing space in which to put forward their views. The National Widows' Association might well have been asked for its views.

Mr. Campbell-Savours: My hon. Friend referred to the number of bankruptcies. He may be interested to know that at a meeting of the parliamentary retail group yesterday the Retail Consortium produced statistics to show that 32,500 businesses have de-registered for VAT in the past 12 months. That is a horrifying statistic. Conservative Members challenged the figures. The director-general of the consortium confirmed that the figures were correct.

Mr. Cryer: That bears out my point that these increases in national insurance contributions will be hard-felt. If people are de-registering for VAT, it indicates a diminution in their turnover. We know that the cash flow of many small businesses is under pressure. In an earlier


speech I referred to a constituent of mine who told me that her husband—an electrician—had had to increase his stock and pay higher interest charges to maintain that stock, and that she had had to raise money on property and had experienced difficulty in that regard.
The Government have floated the idea of enterprise zones on the basis of assisting small firms, including self-employed persons, to take premises in enterprise zones and to develop job opportunities. I do not think that enterprise zones will be of much advantage. I have always taken the view that small firms do not want to be seen to be inferior and that their standards of employment should be as good as those of large firms.
There is a lack of consistency in the Government establishing, on the one hand, enterprise zones to encourage firms and, on the other, increasing the national insurance contributions of small firms. There may be times when the national insurance contributions can be increased They were increased by the Labour Government, but at that time the number of bankruptcies was declining and the number of registrations of companies was increasing, certainly in the last two or three years of Labour Government. No account of size is taken in company registration, but the fact that they were new registrations is indicative of the fact that they were small firms. That indicated that there was a growth in the number of small firms.
It is inconsistent for the Government to impose this levy at a time when everybody knows and understands that manufacturing and service industries are going through a bad time. Through no fault of their own, they are losing profits and losing contracts. Indeed, they are losing their very existence. More and more firms are going to the bankruptcy courts.
The Secretary of State may argue that the Labour Government increased insurance contributions, but the climate then was different. Industry recognises that. Many industrialists, including those involved in small firms, have told me that they made a mistake when they voted Conservative. I recently visited one industrialist who had received a begging letter from his local Conservative association. He threw it on to the desk and said that it would not get a penny from him. He said that he had made a mistake at the general election and that he did not intend to repeat it.
The person who borrowed £80,000 at a much lower rate of interest under the Labour Government—because he wanted part of that sum for pollution control equipment—was deeply disillusioned with the Conservative Party. He did not make any claim, and neither do I-—

The Second Deputy Chairman: Order. The hon. Gentleman is stressing that point unnecessarily. He has said the same thing two or three times.

Mr. Cryer: I am talking about a specific firm, which I have not mentioned before, and—

The Second Deputy Chairman: Order. The hon. Gentleman cannot continue to mention individual firms all right. If he does, the debate could go on indefinitely. The hon. Gentleman can instance certain cases, but so far he has repealed several things.

Mr. Cryer: I am summing up, Mr. Crawshaw, and I am bound to repeat some of the items that I have mentioned.

Mr. Michael Welsh: Of all the letters that you have had—I have had many—have you had any that support the increase?

The Second Deputy Chairman: Order. "You" refers to the Chair. I have not had any letters.

Mr. Cryer: I have received several letters that have been very critical of the Government. They have covered a wide range of issues, such as energy prices. Indeed, those prices have caused grave difficulty to firms in my constituency. They have also covered postal charges. However, I have not received any letters on this subject, because, unfortunately, the self-employed have not had time to write. That is a serious criticism of the way in which this legislation has been introduced.
I hope that I have not strained your patience too much, Mr. Crawshaw. You have been very indulgent and patient. The measure represents an additional burden. Given the economic situation, the self-employed cannot bear it easily. Like the rest of the legislation the measure will prove regressive. It will serve to reduce the number of jobs and job opportunities.

Mr. Winnick: On Second Reading, the Secretary of State admitted:
Some anxiety has been expressed about the impact of the Bill on the self-employed. No doubt this is something that we shall wish to explore in detail in Committee"—[Official Report, 8 December 1980; Vol. 995, c. 955.]
If we did not have to rush through the Bill in one night, we should have more opportunity to explore the impact of increases on the self-employed. My hon. Friend the Member for Keighley (Mr. Cryer) was right. The Secretary of State will correct me if I am wrong, but it appears that the self-employed have not been consulted. We can understand the reaction of the self-employed to these increases.
3.15 am
I have been glancing at the Conservative "Campaign Guide 1977". The Conservative Party in Opposition was very critical of the increases introduced by the Labour Government. It refers to the increases starting in April 1977 and describes them as a form of disguised tax. Under the heading
National Insurance and the Self-employed
it states:
The Party voted against the measures due to be introduced in April 1977.
Clearly, in those days the Conservative Party's attitude was very different from what it is today. The increases were a disguised tax; they were terrible, shocking. Apparently the Labour Government were betraying the self-employed.
There does not seem to be any wish by hon. Members on the Government Benches to contribute to the debate. Conservative Members are here tonight as Lobby fodder. At least, we can ensure that they are present throughout the night.
Apart from the election manifesto, I have taken the opportunity—

Mr. Field: Before my hon. Friend leaves that point, will he make sure that we have all grasped what he was putting? Was the point that in 1977 the Conservative Opposition went into the Lobby to vote against a 5 per cent. rate and that now the Conservative Government are proposing a 5·75 per cent. rate?

Mr. Winnick: Yes, that is correct. My hon. Friend has illustrated the point very well. When the insurance contributions were proposed to be increased, the Conservative Opposition voted against them. If I am wrong, the Secretary of State will no doubt wish to intervene. I assume that he has no wish to deny that that was the position.

Mr. Field: Read it again.

Mr. Winnick: I shall not read it again. In the Conservative Party's manifesto there is a chapter headed "Small businesses". The Conservatives promised to do certain things. They said:
The creation of new jobs depends to a great extent on the success of smaller businesses.
That is true to a certain extent. The point is that small businesses have understandably been feeling the brunt of the recession. A number have gone into liquidation. Many self-employed people have found the going increasingly difficult in the past 18 months. Recession, large-scale unemployment and severe cuts in public expenditure are bound to have an effect on the self-employed.
It is not surprising that many self-employed people, who were promised a new deal by the Conservative Party in Opposition, feel very bitter. They are getting not a new deal but a raw deal. Many of the self-employed who voted Conservative are not likely to forget it or to do so again.
When there is so much pressure on the self-employed because of the economic situation, it is wrong to add an extra burden. On Second Reading the Secretary of State said that he recognised some of the anxieties. I hope that he will explore those anxieties when he replies to the debate.
This important aspect of the Bill cannot be taken on the nod. It is often said that people are cynical about politics. It is not surprising when what is promised by the party in Opposition becomes the opposite when that party forms the Government of the day.
Conservative Members should think seriously about and ponder upon the attitude that they have adopted towards small businesses and the self-employed. Not so long ago, at the general election and previously, they made promises that have come to naught. Unfortunately, there is no opposition to this measure from Conservative Members, even though it will increase the difficulties of the self-employed. For example, a number of people in my constituency who have been affected by the cuts in housing—small builders and the rest—will not be very cheerful when they discover that, on top of all the other problems they face, they will face increased national insurance contributions.
I therefore hope that the amendment will be seriously considered by the Government and that it will not be dismissed out of hand, because I believe that there is a great deal of merit in it.

Mr. Andrew F. Bennett: I shall not follow my hon. Friends the Members for Birmingham, Perry Barr (Mr. Rooker), for Keighley (Mr. Cryer) and for Walsall, North (Mr. Winnick) in their advocacy of amendment No. 14, because they have, done a perfectly adequate job. Little more needs to be said.
I should like to devote a few minutes to amendments Nos. 15 and 16. I assure my hon. Friend the Member for Perry Barr that we got the wording of amendment No. 16 right, otherwise it would not have been selected. The

amendment goes into the whole question of whether or not there should be an upper limit. We made it absolutely clear at the beginning that as we would have the opportunity, in the clause stand part debate, to go into the whole principle of the upper limit it would be unfair to press that amendment at this stage.
Amendment No. 15 would give some relief to some of the firms at the margin. It is the sort of amendment that the Secretary of State, at this time in the morning after a long sitting, ought to be prepared to concede in order to make some progress. That would be much welcomed by the self-employed. I suspect that the Secretary of State will not be able to make that sort of concession, because he will be worried about the progress of the Bill and the fact that there may have to be a Report stage, which can be avoided if no amendments are passed.
It would be a tragedy if, because the Government are so determined to chase the Bill through with such speed, he is not even prepared to consider a small amendment such as No. 15, which would do a lot to ease some of the problems of the self-employed.

Mr. Campbell-Savours: I shall be brief. We have had a remarkable debate. Conservative Members have been silenced in a discussion on the self-employed, and Labour Members have been rising to defend the interests of the self-employed. I am sure that many hundreds of thousands of people would be fascinated if only they could watch this debate on television, listen to it on radio or, indeed, read it in the national press tomorrow. Of course, they will not be given that opportunity.
One of my hon. Friends referred to the number of his constituents who send letters perhaps congratulating the Government on their policy as it affects the self-employed—inasmuch as it puts many of them into financial difficulties. It is significant to note that for years before I became a Member of the House Members of Parliament were frequently loaded down by mail from self-employed constituents who objected in principle—despite the efforts made by the Labour Government—to their existence and to the sort of measures that they were introducing, because they felt that such measures attacked their interests.
Many are now embarrassed, and it is only when one faces the self-employed across the business table that one finds that they are willing to pour out their hearts. I often ask them whether they will be willing to provide me with correspondence that I can use on the Floor of the House in debate. Few are willing to provide that correspondence. They cannot come to terms with the new reality that it is the Labour Party that stands for their interests and that the Conservative Party is letting them down.
When I talk about letting them down, it might be interesting to reflect on the comments of the present Secretary of State for Industry on 11 October 1977, in a pamphlet entitled "Small Business—Big Future". I am sure that Conservative Members will remember the publication of that document. It was produced by a committee chaired by the present Under-Secretary of State for Industry. In the foreword to that document, the Secretary of State for Industry outlined the need for a completely new economic climate. He said:
Governments cannot create prosperity"—
which was followed by a further pearl of wisdom:
but they can prevent other people from creating it".
That is what this Government are doing. They are preventing other people from creating prosperity. We all


know that many hundreds of thousands of self-employed people art; being prevented from creating prosperity. The Under-Secretary went on to say:
At present, that is what the Labour Government is doing"—
The cheek of it! He continued:
Nothing less is needed for the revival of small businesses than a new economic climate. We believe that our approach and our proposals will create the conditions in which firms, both large and small, can thrive, prosper and expand.

Mr. Field: Read that again.

Mr. Campbell-Savours: Those were the comments of the Secretary of State for Industry. It is not surprising, and it is significant, that although the Conservative Benches have been fairly full the Secretary of State for Industry has not attended the debate. Perhaps he thought that some Labour Members would find it irresistible to bring forward quotations such as I have just made.
It is interesting that that same document—"The Campaign Guide Supplement" for the Conservative Party in 1978—said of the unemployed:
In December l977, the Government announced new national insurance rates under which the self-employed, as from April 1978 will have their 8 per cent. earnings-related contribution cut to 5 per cent., and their flat rate contributions reduced from £2· 56 for week for men and £2·55 for women to £1·90 for both men and women.
The Conservative Party then claimed the credit. The document continued:
These changes are a result of pressure exerted on the Government by the Conservative Party and the small firm sector".
We are entitled to know what that same small firm sector is saying.

Mr. Cryer: Does not my hon. Friend accept that the reason why the contribution went down from 8 per cent. to 5 per cent. was that the Labour Government recognised that in certain respects the benefits were being diminished, and we also wanted to end a burden that was the subject of criticism by the self-employed? Basically, we recognised that if the benefits diminished the contributions should also diminish. The Conservative Government are doing the reverse. They are reducing the benefits and increasing the contributions.

Mr. Campbell-Savours: That is something which one notes about all the legislation that the Government have introduced in this area. They seem to be increasing contributions all round while reducing benefits. I have just been informed that there is in the House one of the hon. Members responsible for producing the document, and I cannot believe that the hon. Member for Bath (Mr. Patten) will be able to resist the opportunity of intervening to comment on the words that he wrote two years ago.
3.30 am
It would be wrong for me to finish without commenting on the wider implications for small firms that will stem from any increase in any of their expenditure. All hon. Members know that small firms are going through a difficult period. I do not blame the Government alone. There is an international recession, and the Government's inability to follow a policy in line with the monetary targets that they set is only part of the problem.
Small firms are suffering other problems. Many have properties that are subject to old lease agreements. With the fall in rental values of property, many small companies arc paying rents that they would not be paying if their lease

fell in tomorrow and had to be renegotiated. A number of charges fall on small businesses stemming from agreements made before the recession, and they should be taken into account by the Government when they introduce charges that affect small businesses.
A major problem affecting small firms is the collapse of demand. Hon. Members who were present at yesterday's meeting when the Retail Consortium outlined the problems in the economy will appreciate that it was clear from the document and the subsequent discussion that the downturn in demand is destroying much of our retail sector. Unless we preserve that sector, we shall damage considerably the possibility of its future expansion.
It may be easy to close a firm merely by putting a padlock on the door. But companies are far more difficult to reopen, and any firm that is forced out of business due to a policy introduced by the Government which effectively clobbers the cash flow of the company is in a position which could have been avoided if the Government had pursued another strategy.
In introducing any policy that may affect small businesses, the Government should reflect in depth on the possible damage that may be caused by that policy, because they may force out of business a company that will not be able to start up again and may have to lay off labour, which will fall as a burden on the Exchequer through unemployment and supplementary benefit payments.
After the memorable statement by the Chancellor of the Exchequer which led to a row that lasted all week and clearly shook the Prime Minister and the Government, I asked a question which remains unanswered. I asked how industry and business would be affected—

The Chairman (Mr. Bernard Weatherill): Order. I hope that it is a question that the Minister will be able to answer.

Mr. Campbell-Savours: The Secretary of State can answer it. He can tell us whether he feels that it is in order for his Department to introduce changes in national insurance contributions that have the effect of damping down demand in the economy, particularly when, the country is reeling in the current economic climate.

Mr. Dobson: My hon. Friend the Member for Workington (Mr. Campbell-Savours) has read out a number of statements issued by the paid propagandists of the Conservative and Unionist Party before the general election. They included a personal contribution setting out the hopes, aspirations and dreams of the man who is now Secretary of State for Industry.
In relation to small businesses, the Secretary of State for Industry was entitled to have his dreams. To anyone who thought about it, they may have seemed rather strange and to be based on some perverse Chicago economic doctrines. Nevertheless, the right hon. Gentleman was entitled to them, and to some extent we are criticising them with hindsight, because we know that what has happened to small businesses since the Government took office has been extremely bad.
But perhaps even more criticism can be levelled at the Secretary of State for Social Services, because he, apparently, does not realise even now that things are going badly. When he spoke in Cardiff on 19 April he said, according to the official press statement from Conservative Central Office:


The list of measures to help small businesses is a long and impressive one. Already there are signs that the climate is changing. Up and down the country there is beginning to be"—

The Chairman: Order. I am sorry to interrupt the hon. Gentleman, but he must relate his remarks to insurance and not to general matters.

Mr. Dobson: I was attempting to demonstrate that, despite the present economic circumstances of small businesses, the Government are proposing to introduce a further imposition on them by way of this increase in the national insurance contribution for the self-employed.
That springs partly from the apparent view of the Secretary of State for Social Services, as enunciated in his Cardiff speech, that things are actually improving for small businesses. He went on to say that new businesses were starting up and new ideas were being developed. That simply is not true. As my hon. Friend the Member for Keighley (Mr. Cryer) has pointed out, the number of bankruptcies is increasing while the number of new registrations is going down.

Mr. Buchan: My hon. Friend may be a little behind the times in suggesting that new ideas are not developing. The Prime Minister made a speech last night in Cardiff in which she said that a major plank in her programme was now constructive intervention—which sounds very much like a U-turn to me.

Mr. Dobson: I am sure that many people in small businesses in Wales would look forward to constructive intervention. I fear that a lot of people in Wales and in the rest of the country will find what the Government are proposing tonight to be destructive intervention, because it will destroy or reduce some of the funds at present available to small businesses and the self-employed, to whom the Government have attached so much importance in their economic policy.
The Secretary of State pointed out in his Cardiff speech that when larger firms invest it is often in new labour-saving machinery, so that increased output may not mean increased employment. He added, rather exaggerating his case:
If small firms start up, then because they are labour-intensive more jobs are at once created.
That has always been a doubtful theory, though it applies in some cases. Nevertheless, on the right hon. Gentleman's own views, by these measures he will reduce the amount of money left in the pockets of small entrepreneurs, whom the Government intend to galvanise, to keep in their businesses and do whatever it is that small entrepreneurs are supposed to do with their money when putting it into their businesses.
It is not simply that the Secretary of State for Industry was indulging in wild dreams. Despite all the evidence, the Secretary of State for Social Services still believes that those dreams are coming to fruition.
I hope that the Committee will support the amendments, which will help in small measure to protect the small businesses on which the Government have set such store.

Mr. Patrick Jenkin: We had an enlightening, somewhat strange debate about the problems of the self-employed. Perhaps "crocodile tears" is not too unkind a

phrase to use about what we have seen. I remember the rows when the Labour Government, immediately on coming to office in 1974, slapped up the class 4 rate for the self-employed from 5 per cent. to 8 per cent. It was only after two years' battling in the House and outside that they saw the light, and in 1978 the rate came back down to 5 per cent. Therefore, one treats the remarks of Labour Members about their sympathy with, and friendliness towards, the self-employed with several large handfuls of salt.
The hon. Member for Keighley (Mr. Cryer) was right when he said that overwhelmingly the self-employed supported parties other than Labour, because the Labour Party stands for principles and attitudes that are anathema to the vast majority of those who have the freedom and enterprise to run their own businesses. Therefore, I am not sure how seriously we need to treat the panegyrics from the Labour Party.
The self-employed are an important part of economy. My hon. Friend the Under-Secretary of State for Industry, the hon. Member for Basingstoke (Mr. Mitchell), has carried out a notable task in the past 18 months in a whole range of measures designed to help the self-employed and small businesses. He deserves every commendation for that.
Contrasted with the swingeing penalty that Labour imposed on the self-employed, the increase proposed in the Bill—from 5 per cent. to 5·75 per cent. in class 4—is small. It is wholly in line with the increases in contributions that are being sought from other classes of contributor.
On an earlier amendment I referred to the method by which the contributions of the self-employed are calculated, as spelt out in the Government Actuary's report in 1977. It is fair to maintain precisely the same relativity as has been sustained over the past three or four years, pending the outcome of the investigation that we launched in October. That is exactly what the clause achieves.

Mr. Winnick: Does not the right hon. Gentleman agree that at present—it has been so for the past year or so, despite the efforts of the Under-Secretary of State for Industry—the self-employed have been especially hard hit? There have been many bankruptcies. Surely it must be obvious to him that, however slight he might consider the increase to be, it will cause extra burdens to fall on those who are already under great pressure.

Mr. Jenkin: Businesses as a whole are going through a difficult period during a serious recession that is having an effect on the whole of the Western world. I do not detect any signs that the self-employed are undergoing any more serious difficulties than any other group. On the contrary, I have the impression that the general resilience and enterprise of the self-employed are keeping firms afloat and prosperous even in today's difficult circumstances.

Mr. Campbell-Savours: Mr. Campbell-Savours rose—

Mr. Jenkin: I feel that at a time when the Government consider it appropriate to raise a substantial additional sum by way of national insurance contributions—the Bill was, of course, given a Second Reading—the self-employed will accept that they should pay a strictly proportional share on the same basis as that which has applied in the past.
The hon. Member for Birmingham, Perry Barr (Mr. Rooker) asked about the statutory sick pay scheme. He asked whether there would be further changes when the statutory sick pay scheme took effect. In the clause and the amendments, we are talking about the national insurance contributions paid by a self-employed person in respect of himself and his family. There is nothing in the Green Taper, or in what I have called the mark 2 scheme, that has an effect on that. The self-employed person in business on his own account who falls sick will be entitled to sickness benefit from the national insurance fund as at present. There will, however, be changes in certain arrangements for the first eight weeks for employees, including those in small firms and employees of the self-employed. As the House of Commons will remember, in any speech on the Gracious Speech I outlined the substantial changes that the Government were prepared to make in response to the representations following the publication of the Green Paper. It was a consultative paper. We have listened to the representations that have been made, including many from my hon. Friends, and have come forward with a package of changes that have received a fairly warm welcome. There is no question of two changes as the hon. Member for Perry Barr suggested. We are talking of two different matters.
I am not sure that I can add much more to the debate. We have had long speeches from the hon. Members for Stockport, North (Mr. Bennett), for Keighley and for Workington (Mr. Campbell-Savours). However, apart from saying that a burden would be added to the self-employed, I am not sure that they said very much. It is a small additional burden that is being added that is directly proportional to that which others are being asked to accept.

Mr. Andrew F. Bennett: Mr. Andrew F. Bennett rose—

Mr. Jenkin: No, I shall not give way. If I say that the reduction in the income to the national insurance fund would be about £6 million and the reduction in the contribution to the National Health Service would be about £3 million if the amendments were accepted, and the relationship that has existed for some years between the self-employed and other categories of contributor would be upset, I think that the Committee will recognise that it would not be wise to accept the amendments. I do not advise the Committee so to do.

Mr. Cryer: I shall make a brief contribution. The Secretary of State has been rather demeaning about our contributions and comments. I do not think that he is fair in answering the debate in such a brief way and saying that the loss of revenue would be about £9 million and, therefore, he cannot recommend the Committee to accept the amendments. It is such a small amount that we are justified in saying that the burden may be disproportionate having regard to the economic difficulties which small businesses, including the self-employed, are now undergoing.
The Secretary of State nude slighting remarks about the tone of our contributions. He said that the Labour Government did not help small businesses, so why should he take notice of our comments. I believe that the right hon. Gentleman used the phrase "crocodile tears". I remind him that we, the Labour Government, set up small firms information centres and the small firms counselling service nation-wide, involving the expertise of small businesses, including the self-employed. We introduced

various grant schemes, such as the market entry guarantee scheme, to help small firms exporting—which the right hon. Gentleman's Government have continued, so it must have had value; but we introduced it. We, the Labour Government, had a small firms employment subsidy scheme to give direct cash assistance and stimulus to small firms to take on new employees, contributing to the employment of some 50,000 people.

Mr. Dobson: Will my hon. Friend give way?

The First Deputy Chairman (Mr. Bryant Godman Irvine): Order. We do not want to get into a debate on what the previous Administration did for small firms. Hon. Members must relate their remarks to the Bill.

Mr. Dobson: I should like to raise with my hon. Friend what the present Administration are doing to small firms.

The First Deputy Chairman: Relating to insurance?

Mr. Dobson: I shall try very hard. I have received representations, which I have passed to the Secretary of State for Trade, from small businesses, some of which will almost undoubtedly be affected by these measures. They complain to me that the export credit guarantee limits have been changed in a way that is damaging to them.

Mr. Cryer: I do not want to follow that path. However, it is fair, as I have done already, to emphasise that the Labour Government's record throughout their term of office with regard to small firms is very reasonable indeed. It is wrong for the Secretary of State to say that our comments tonight are not made from any genuine concern. Our record in office demonstrates that we have genuine concern. Many small firms claim that the CBI does not represent them accurately.
The increase may well tilt the balance for a small firm's existence—possibly a self-employed person employing a few people. It is no good the Secretary of State coming out with such platitudes as that the resilience of small firms will see them through. He knows, I know and the remainder of the House, including the Tory Members, knows that small firms are under great pressure and are increasingly going to the wall—to the bankruptcy courts.

Mr. Campbell-Savours: Is it not significant that when the Secretary of State referred to the international recession and its effect on small businesses he did not refer to the need to insulate them against it? It is particularly significant as we understand that the Conservative Party is preoccupied with insulating the groups that it believes have a contribution to make to the national economy.

The First Deputy Chairman: I appreciate that the hon. Member for Keighley (Mr. Cryer) was once the Minister with responsibility for small firms, but he must relate his remarks—I am sure that he will do so—to the insurance principle and not to these other matters.

Mr. Cryer: I shall conclude my remarks. I do not want to be accused of self-justification. I am picking up the Minister's attack. It is not unfair to say that self-justification occurs a few times too many.
The insurance increase may well tilt many small firms into bankruptcy. That is a danger and we do not want it to happen. That applies not only to small firms. This is not a good way of raising revenue. It is a bad part of a bad Bill. The self-employed will be affected by this clause and other groups by other clauses. That is why the Government should pursue alternative means.
We are opposed to the Bill, but we have tabled our amendments in a spirit of compromise. We are doing what the Daily Express, The Sun and the Daily Mail want, and that is to be a united and constructive Opposition. We are trying to raise the lower income bracket of the self-employed to exempt those on the lowest incomes from the increases. We want to keep the increase down in any event.

Mr. Winnick: My hon. Friend referred to the undoubted burden that the self-employed will face from these increases. The Secretary of State regarded that as a slight matter, as no extra burden. However, not one Conservative Member has argued on matters related to the self-employed. Bearing in mind how frequently the Conservative Party claims to represent small business and the self-employed, is it not amazing that Conservatives do not argue points on this subject?

Mr. Cryer: The Secretary of State said that the majority of the self-employed support the Conservative Party. That raised a cheer from his Back Benchers. But he and his hon. Friends know that while that was true in 1979 it is true no longer. As the self-employed have experienced the bitterness and difficulties of being governed by a Conservative Administration, they have shifted their allegiance towards the Labour Party to provide them with the Government they need.

Question put, That the amendment be made:—

The Committee divided: Ayes 16, Noes 197.

Division No. 26]
[3.59 am


AYES


Bennett, Andrew (St'kp't N)
Johnston, Russell (Inverness)


Buchan, Norman
McCartney, Hugh


Campbell-Savours, Dale
Race, Reg


Cocks, Rt Hon M. (B'stol S)
Rooker, J. W.


Cryer, Bob
Welsh, Michael


Dobson, Frank
Winnick, David


Dormand, Jack



Ewing, Harry
Tellers for the Ayes:


Field, Frank
Mr. Walter Harrison and


Haynes, Frank
Mr. Terry Davis.




NOES


Alexander, Richard
Budgen, Nick


Atkinson, David (B'm'th,E)
Butcher, John


Baker, Nicholas (N Dorset)
Cadbury, Jocelyn


Banks, Robert
Carlisle, Kenneth (Lincoln)


Bendall, Vivian
Chalker, Mrs. Lynda


Benyon, Thomas (A'don)
Channon, Rt. Hon. Paul


Benyon, W. (Buckingham)
Churchill, W. S.


Berry, Hon Anthony
Clark, Hon A. (Plym'th, S'n)


Best, Keith
Clarke, Kenneth (Rushcliffe)


Bevan, David Gilroy
Colvin, Michael


Biggs-Davison, John
Cope, John


Blackburn, John
Corrie, John


Blaker, Peter
Costain, Sir Albert


Boscawen, Hon Robert
Cranborne, Viscount


Bottomley, Peter (W'wich W)
Crouch, David


Bowden, Andrew
Dean, Paul (North Somerset)


Braine, Sir Bernard
Dixon, Donald


Bright, Graham
Dorrell, Stephen


Brinton, Tim
Douglas-Hamilton, Lord J.


Brittan, Leon
Dunn, Robert (Dartford)


Brooke, Hon Peter
Durant, Tony


Brotherton, Michael
Eggar, Tim


Brown, M.(Brigg and Scun)
Elliott, Sir William


Browne, John (Winchester)
Emery, Peter


Bruce-Gardyne, John
Faith, Mrs Sheila


Bryan, Sir Paul
Farr, John


Buck, Antony
Fell, Anthony





Fenner, Mrs Peggy
Normanton, Tom


Forman, Nigel
Onslow, Cranley


Fraser, Peter (South Angus)
Osborn, John


Gardiner, George (Reigate)
Page, Rt Hon Sir G. (Crosby)


Gardner, Edward (S Fylde)
Page, Richard (SW Herts)


Garel-Jones, Tristan
Parris, Matthew


Goodhart, Philip
Patten, Christopher (Bath)


Gorst, John
Pattie, Geoffrey


Grant, Anthony (Harrow C)
Pawsey, James


Greenway, Harry
Pink, R. Bonner


Grieve, Percy
Pollock, Alexander


Griffiths, E.(B'y St. Edm'ds)
Price, Sir David (Eastleigh)


Griffiths, Peter Portsm'th N)
Proctor, K. Harvey


Gummer, John Selwyn
Raison, Timothy


Hamilton, Hon A.
Rathbone, Tim


Hampson, Dr Keith
Rees, Peter (Dover and Deal)


Hannam, John
Renton, Tim


Haselhurst, Alan
Rhys Williams, Sir Brandon


Hastings, Stephen
Ridsdale, Julian


Havers, Rt Hon Sir Michael
Sainsbury, Hon Timothy


Hawkins, Paul
St. John-Stevas, Rt Hon N.


Hawksley, Warren
Shaw, Michael (Scarborough)


Heddle, John
Shelton, William (Streatham)


Henderson, Barry
Shepherd, Richard


Hooson, Tom
Shersby, Michael


Howell, Ralph (N Norfolk)
Silvester, Fred


Hunt, David (Wirral)
Sims, Roger


Hunt, John (Ravensbourne)
Smith, Dudley


Jenkin, Rt Hon Patrick
Speller, Tony


Johnson Smith, Geoffrey
Spence, John


Jopling, Rt Hon Michael
Spicer, Jim (West Dorset)


Kershaw, Anthony
Sproat, Ian


Knight, Mrs Jill
Squire, Robin


Lamont, Norman
Stainton, Keith


Lang, Ian
Stanbrook, Ivor


Latham, Michael
Steen, Anthony


Le Marchant, Spencer
Stevens, Martin


Lennox-Boyd, Hon Mark
Stewart, Ian (Hitchin)


Lester Jim (Beeston)
Stokes, John


Lloyd, Peter (Fareham)
Tapsell, Peter


Loveridge, John
Taylor, Teddy (S'end E)


Luce, Richard
Tebbit, Norman


Lyell, Nicholas
Thomas, Rt Hon Peter


McCrindle, Robert
Thompson, Donald


Macfarlane, Neil
Thorne, Neil (Ilford South)


MacGregor, John
Townend, John (Bridlington)


MacKay, John (Argyll)
Townsend, Cyril D, (B'heath)


McNair-Wilson, P. (New F'st)
Trippier, David


McQuarrie, Albert
Trotter, Neville


Madel, David
van Straubenzee, W. R.


Major, John
Vaughan, Dr Gerard


Marland, Paul
Viggers, Peter


Mates, Michael
Wakeham, John


Mather, Carol
Waldegrave, Hon William


Maude, Rt Hon Angus
Walker, B. (Perth )


Mawhinney, Dr Brian
Wall, Patrick


Maxwell-Hyslop, Robin
Waller, Gary


Mayhew, Patrick
Ward, John


Mellor, David
Warren, Kenneth


Meyer, Sir Anthony
Watson, John


Miller, Hal (B'grove)
Wells, John (Maidstone)


Mills, Iain (Meriden)
Wells, Bowen


Mills, Peter (West Devon)
Wheeler, John


Miscampbell, Norman
Whitney, Raymond


Moate, Roger
Wickenden, Keith


Moore, John
Wilkinson, John


Morrison, Hon C. (Devizes)
Winterton, Nicholas


Morrison, Hon P. (Chester)
Wolfson, Mark


Myles, David
Young, Sir George (Acton)


Neale, Gerrard



Needham, Richard
Tellers for the Noes:


Nelson, Anthony
Mr. John Stradling Thomas and


Neubert, Michael
Mr. David Waddington.


Newton, Tony

Question accordingly negatived.

Question proposed, That the clause stand part of the Bill.

Mr. Buchan: Thank you, Mr. Weatherill, for granting a clause stand part debate. We recognise that during the debates on the amendments we explored a great deal of what is in the clause, but there is one matter which, for technical reasons, could not be brought within the Bill and we appreciate the opportunity to raise it now.
We attempted to raise the matter in our new clause 2, but it was not technically in order and could not be brought into order. The point at issue is the upper limit for contributions. We had some discussions on this matter earlier, in the context of what we saw as an unfairness between the 17 per cent. lift at the bottom and the 22 per cent. lift at the top. We felt chat that constituted an element of unfairness between the rich and the poor, deliberately brought in under the Bill.
There is, however another aspect that I wish to raise. If we are right in saying that the clause—and, indeed, the Bill and what has been said by the Chancellor of the Exchequer—represents the development of a poll tax—a reduction in the Treasury element, with taxation coming later—perhaps we should treat it as a form of taxation and inject into it something of the social justice and fairness that we associate with taxation. The great advantage, in social terms, of taxation over contributions is that there can be graduations and social fairness.
We think that, on the figures that have been given, there is an element of social injustice here, and not parity of treatment. Secondly, by having a certain ceiling—now proposed at £200—there is an area of contributions that could be covered if we were to abolish the upper ceiling —an area of contributions that could help to finance the national insurance fund, which has brought all this on our heads over the last two weeks. If the contributions are to be used in the pension concept as a form of taxation, and if that is to be treated in all ways as a form of taxation, let us ensure that those who are richest pay more.
The problem that we had was to relate that to the return in benefits, because we wished to be just to the rich. It would not be possible, on the one hand, to treat as a form of contributions unlimited payment over that if it was technically an insurance scheme without some return. Equally, we are not prepared to allow that return to reach inordinate levels of benefit. Therefore, it would have been necessary to associate with it continually downward graduations of benefits in return for the contributions paid. That would make some sense of the concept that is developing of using national insurance pension methods as a form of tax to deal with an economic crisis.
Quite apart from that immediate consideration, other ideas are now emerging, such as the reduction in the Treasury element — the 18 to 14 per cent. element. There is also the breaking of the consensus that was established when Brian O'Malley spoke on our behalf as a Minister. There was a general consensus on pension problems, allied to the problem that affected the Conservative Party, namely, the question of private pensions.
All those things are getting cracked. The social basis of national insurance is getting cracked. Using the contributions to the fund in the way that we have seen over the last fortnight is cracking that consensus. Because of that, it is time that we considered the matter afresh. If we require revenue—and the Government say that this is a source of revenue — is there not now a case for the upper limit to be abolished?
We should like to hear the Minister's views. I am sorry that the Secretary of State is not here. On the other hand, a Treasury Minister is on the Government Front Bench and he might like to reply to the debate. This is a serious matter. It is one that should be considered, because it has been brought to the forefront by the actions of the Government. If they wish to refer to the consensus, we may choose to be more considerate. If not, we shall have to give serious consideration to the matter.

Mr. Race: The case for abolishing the upper Limit is very strong. I shall contrast the Government's attitude to the upper limit with their attitude to the lower limit. The Government's attitude is scandalous. They say that they will increase the upper earnings limit by 22 per cent. That is an increase by the full amount. That means that they want to protect the highest-paid in society from this form of taxation and they are prepared to engage in that kind of policy for their own supporters, who are the highest paid in society. Yet they are not prepared to embark upon a policy of protecting the lowest-paid from their policy. That is the political contrast that needs to be made in this debate. The lower threshold is frozen at £27 per week. The upper limit is increased to the maximum possible under the primary legislation.
If and when national insurance contributions become tax-deductible there may be a different policy on the question of the upper earnings limit. Once national insurance contributions become tax-deductible, part of the pressure to protect the highest-paid in society from this kind of approach will disappear from the Treasury's thinking, because the ability of those in the highest-earnings section to trade off their national insurance contributions against tax may be a very attractive proposition. Some may argue that their contributions should be brought into the tax net for that purpose. For a person earning large amounts it is very important that he should be able to trade off some of his contributions against income.
This measure is inequitable, because at the same time as the Government are increasing contributions they are cutting benefits. An argument that has been used in the past is that increases in contributions protect the value of benefits. That is not an argument that can be sustained by this Government at this time, because of their action in the Social Security (No. 2) Act, which cuts benefits this year and provides for the Government to cut benefits by specified amounts in the next financial year. That is a denial of the principle that increases in contributions protect benefits.
This is an argument not about social welfare or social insurance but about income tax. That is why the upper earnings limit has been pushed to the limit, and that is why the Government are indexing the higher tax bands. They are trying to protect the better-paid from increasing unemployment. As has been said, the people will draw their own conclusions. They will see national insurance contributions as part of the stoppages that they suffer every week. People will not be able to distinguish between national insurance contributions and the amount of income tax that they pay each week, just as many council tennants do not distinguish between the amount of rent and the amount of rates that they pay each week. It is the overall sum that matters.
Those at the lower end of the income scale will contrast their position with that of the higher-paid, who have once again been protected against the economic crisis. This measure is presumably part of the incentive package that the Conservative Party pledged to introduce before it came into office. When will we see a quantifiable result from that so-called incentive package?

Mr. Field: This debate will have been time well spent if it results in a clear statement from the Under-Secretary on why the Government cannot lift the ceiling. Those who have listened to and participated in the debates this week have formed the impression that the Government would like to lift the ceiling but that there are immutable forces acting against that.
There seem to be two forces at work. First, we are told that if the ceiling is raised it will break a crucial part of the pension settlement of 1975. I have talked to some of those who helped to formulate the 1975 Act. They are certain that the principle behind setting the ceiling was simple. They were concerned that the graduated national insurance contributions should hit a cut-off point just before reaching the higher tax rates. If that is so, the Budget changes, particularly those made in 1979, allow the Government to operate on that front.
We are all aware that the income tax bands have been greatly widened. The first band at the higher rate is now at a considerably higher level. If the Government wish to stick to the argument that there was some agreement in the Social Security Pensions Act 1975, will they spell it out? Do the Government maintain that those who have not contracted out, and who are now asked to pay a graduated contribution over a wider band of income, will have a significant effect on pensions in the private sector? I should like an answer. These are important questions to which all of us, including Conservative Members, would like answers.
It would be foolish for anyone to think that this is the last Bill of this kind that we shall see in this Parliament. Because of the Government's difficulty in meeting their monetary and public sector borrowing requirement targets, there will be a similar Bill next year. The argument that at a time of growing unemployment it would be wrong to put any of the increased cost of national insurance on employers and that therefore the total weight of the increase should be put on employees would gain greater weight in the country if the employees' contributions could be graduated in some way. That could be achieved if the ceiling were raised and if we took out of national insurance taxation those at the very bottom.
What is the argument to which the Government are sticking at this late stage in this one-week Bill? Is it something connected with the Social Security Pensions Act 1975 that prevents them from operating on the ceiling? If so, for the first time this week will they spell out what that connection is? If not, what is the reason? Am I right in thinking that those who drew up the 1975 Act saw it purely in terms of preventing those who were paying the old surtax or the higher rates of tax also paying graduated contributions above the then ceiling?
These are important, not academic, questions because as each year of this Parliament passes we shall have similar Bills to the one that we are considering today. If we can build some flexibility into the system by getting extra

revenue from those at the top to make national insurance taxation less regressive, the passage of the next Bill may be slightly easier than this one.

Mrs. Chalker: The questions that have been posed in this stand part debate were put forward earlier by the hon. Member for Birkenhead (Mr. Field). I shall seek to answer those questions.
Whereas some hon. Members may feel that there is a strong argument for the abolition of the upper earnings limit, the Government do not. At the risk of repeating what I said in earlier debates, I shall try to make clear one of the firm reasons why we do not believe that with the arrangements that we have in the Social Security Pensions Act 1975 it would be advisable, practicable or even possible to abolish the upper earnings limit.
If the upper earnings limit were removed there would be no limit on the size of the pension that could be earned by the very high earners. If we were to limit that pension entitlement and at the same time were to remove the upper earnings limit, those high earners would not be getting value for their contributions.
There are several reasons why it would not be possible to remove the upper earnings limit. First, as I have said, we need an upper earnings limit for pension purposes and it needs to be fixed at about the existing level to accommodate the contracting-out arrangements. Those contracting-out arrangements represented the fundamental principle on which agreement was reached between all parties in the Social Security Pensions Act 1975. The contribution rates for the contracted-out would run at the full rate up to the lower earnings limit, the contracted-out rate from there up to the upper earnings limit, and the full rate from the upper earnings limit upwards.
If we were to abolish the upper earnings limit the change would emphasise the need to secure much greater accuracy in the employer's deduction documents in regard to earnings in the middle range. Although I cannot expect hon. Members to understand the detail of this, I can assure them that from my investigation and from the working processes that aim to get the pensions paid accurately it is crucial that the accuracy in the deduction documents that are handled by the employers should be maintained.
4.30 am
We would be in the state of having three variable rates, because without an upper earnings limit, the additional components for the State scheme pension simply could not be calculated without having three separate calculations. The guaranteed minimum pensions, which are a prime feature of the second pension scheme, depend entirely on these records.
I am not saying that at some future time, when all companies were computerised and kept their records absolutely perfectly, such a complicated arrangement could not be achieved, but I must tell the Committee that, from my knowledge of the present system and from the present information supplied to Government Departments by employers, it simply could not be done within the confines of the present system and the present computer capacity of a large number of employers. We would produce total chaos in the calculation of the added components. While that is not the complete argument, it is a severe practical restriction on what could be done at present.
We know that there have been heavy errors in the present deduction document recording system because of


the inability of many employers to fill in the documents with the accuracy that is required to enable us to calculate the additional components and the guaranteed minimum pension that depend on them.
We have had so many years of political football with regard to the pension scheme.

Mr. Buchan: We are having it again.

Mrs. Chalker: We are talking about the upper earnings limit. Perhaps some Labour Members do not realise what an achievement it was in 1975 to reach this degree of success between the private occupational schemes and the State scheme. An enormous part has been played by industry. We sometimes forget that when we talk about the difficulties experienced by Government in calculating things correctly. Industry, particularly the pensions industry, has put in an enormous amount of work in order to accommodate the 1975 legislation. It would be totally undesirable, as well as quite unfeasible in the present computer capacity of employers' schemes, to start disturbing or dismantling the arrangements so soon after they have starred.
One hon. Member suggested that we might make national insurance contribution tax-deductible. Some hon. Members may remember that before 1965 part of the national insurance contributions that went towards the taxable basic pension was indeed tax-deductible, while the part of the contributions that went towards the non-taxable short-term benefits was not. In other words, they were not taxed twice. That was altered in 1965 by the right hon. Member for Cardiff, South-East (Mr. Callaghan), I believe. I shall give the reasns why the relief was then finally abolished and personal allowances increased at the same time.
First, there was a regressive anomaly in this. By that I mean that the higher an individual's contributions the higher was his relief. The compensating personal allowance was able to benefit more people than the original lax deductibility of the national insurance contributions. Looking back on old schemes, I have no doubt that the administrative complications between taxing one part and not taxing the other part of national insurance contributions were an added factor.
My hon. Friend the Member for Norfolk, North (Mr. Howell) asked some time ago what would happen if relief were applied to contributions and what would be the cost. It would be between £1½billion and £2 billion, which would then have to be made up by increases either in contribution rates or in taxes.
I hope that I have said enough at this late hour to explain that it is not feasible to dc away with the upper earnings limit, and there is not as strong a case for abolition as some hon. Members, would have us believe. We must maintain a period of constant working in our pensions industry if we are ever to make sure that those second pensions, for which we are encouraging people to contribute either through their occupational scheme or through the State scheme, are to become a reality without putting insuperable burdens once more on the British people. I hope that Labour Members will see the sense and wisdom that was shown by the late Brian O'Malley when we achieved this consensus before, and which I hope we shall retain this evening.

Mr. Buchan: I thank the Minister for making such efforts in anticipating the nature of the discussion and

preparing for it. However, she will accept that it is less satisfactory to an Opposition to be told that there are difficulties than to have an outright rebuttal of the arguments involved. We are not satisfied.
On the question of the unevenness of payment, the concept that could be developed if we move towards abolition is to regard the insurance fund as a social fund, in the same way as taxation is a social income which is used for the good of the community and paid into according to the means of the individuals in the community.
There are considerable problems on private pension funds, and I admit that I do not know them. I have held this position for 48 hours, and I accept that there are major difficulties. I know that this area requires investigation. We can never use the practical difficulties of schemes as an excuse. It has happened too often in history that the practical has been used to prevent thought. I hope that the Department will look into the matters as deeply as possible—certainly Labour Members will—to see whether there is progress to be made. The attitude of the Government—I am being as pleasant as I can—has broken much of the consensus on both sides of the House in relation to the pension structure and its involvement and co-operation with the private sector. We shall have to look at the matter over the next 12 or 24 months.

Question put, That the clause stand part of the Bill:—

The Committee divided: Ayes 194, Noes 16.

Division No. 27]
[4.39 am


AYES


Alexander, Richard
Dunn, Robert (Dartford)


Atkinson, David (B'm'th,E)
Durant, Tony


Baker, Nicholas (N Dorset)
Eggar, Tim


Banks, Robert
Elliott, Sir William


Bendall, Vivian
Emery, Peter


Benyon, Thomas (A'don)
Eyre, Reginald


Benyon, W. (Buckingham)
Faith, Mrs Sheila


Berry, Hon Anthony
Farr, John


Best, Keith
Fell, Anthony


Bevan, David Gilroy
Fenner, Mrs Peggy


Biggs-Davison, John
Forman, Nigel


Blackburn, John
Fraser, Peter (South Angus)


Blaker, Peter
Gardner, Edward (S Fylde)


Bottomley, Peter (W'wich W)
Garel-Jones, Tristan


Bowden, Andrew
Goodhart, Philip


Bright, Graham
Gorst, John


Brinton, Tim
Grant, Anthony (Harrow C)


Brittan, Leon
Greenway, Harry


Brooke, Hon Peter
Grieve, Percy


Brotherton, Michael
Griffiths, E.(B'y St. Edm'ds)


Brown, M.(Brigg and Scun)
Griffiths, Peter Portsm'th N)


Browne, John (Winchester)
Gummer, John Selwyn


Bruce-Gardyne, John
Hamilton, Hon A.


Bryan, Sir Paul
Hampson, Dr Keith


Buck, Antony
Hannam, John


Budgen, Nick
Haselhurst, Alan


Butcher, John
Hastings, Stephen


Cadbury, Jocelyn
Havers, Rt Hon Sir Michael


Carlisle, Kenneth (Lincoln)
Hawkins, Paul


Chalker, Mrs. Lynda
Hawksley, Warren


Channon, Rt. Hon. Paul
Heddle, John


Churchill, W. S.
Henderson, Barry


Clark, Hon A. (Plym'th, S'n)
Hooson, Tom


Clarke, Kenneth (Rushcliffe)
Howell, Ralph (N Norfolk)


Colvin, Michael
Hunt, David (Wirral)


Cope, John
Hunt, John (Ravensbourne)


Corrie, John
Jenkin, Rt Hon Patrick


Costain, Sir Albert
Johnson Smith, Geoffrey


Cranborne, Viscount
Jopling, Rt Hon Michael


Crouch, David
Kershaw, Anthony


Dean, Paul (North Somerset)
Knight, Mrs Jill


Dickens, Geoffrey
Lamont, Norman


Dorrell, Stephen
Lang, Ian






Latham, Michael
Ridsdale, Julian


Le Marchant, Spencer
Sainsbury, Hon Timothy


Lennox-Boyd, Hon Mark
St. John-Stevas, Rt Hon N.


Lester Jim (Beeston)
Shaw, Michael (Scarborough)


Lloyd, Peter (Fareham)
Shelton, William (Streatham)


Loveridge, John
Shepherd, Richard


Luce, Richard
Shersby, Michael


Lyell, Nicholas
Silvester, Fred


McCrindle, Robert
Sims, Roger


MacGregor, John
Smith, Dudley


MacKay, John (Argyll)
Speller, Tony


McNair-Wilson, P. (New F'st)
Spence, John


McQuarrie, Albert
Spicer, Jim (West Dorset)


Madel, David
Sproat, Ian


Major, John
Squire, Robin


Marland, Paul
Stainton, Keith


Mates, Michael
Stanbrook, Ivor


Mather, Carol
Stevens, Martin


Maude, Rt Hon Angus
Stewart, Ian (Hitchin)


Mawhinney, Dr Brian
Stokes, John


Maxwell-Hyslop, Robin
Stradling Thomas, J.


Mayhew, Patrick
Tapsell, Peter


Mellor, David
Taylor, Teddy (S'end E)


Meyer, Sir Anthony
Tebbit, Norman


Miller, Hal (B'grove)
Thomas, Rt Hon Peter


Mills, Iain (Meriden)
Thompson, Donald


Mills, Peter (West Devon)
Thorne, Neil (Ilford South)


Miscampbell, Norman
Townend, John (Bridlington)


Moate, Roger
Townsend, Cyril D, (B'heath)


Montgomery, Fergus
Trippier, David


Moore, John
Trotter, Neville


Morrison, Hon C. (Devizes)
van Straubenzee, W. R.


Morrison, Hon P. (Chester)
Viggers, Peter


Myles, David
Waddington, David


Neale, Gerrard
Wakeham, John


Needham, Richard
Waldegrave, Hon William


Nelson, Anthony
Walker, B. (Perth )


Neubert, Michael
Wall, Patrick


Newton, Tony
Waller, Gary


Normanton, Tom
Ward, John


Onslow, Cranley
Warren, Kenneth


Osborn, John
Watson, John


Page, Rt Hon Sir G. (Crosby)
Wells, John (Maidstone)


Page, Richard (SW Herts)
Wells, Bowen


Parris, Matthew
Wheeler, John


Patten, Christopher (Bath)
Whitney, Raymond


Pattie, Geoffrey
Wickenden, Keith


Pawsey, James
Wilkinson, John


Pink, R. Bonner
Winterton, Nicholas


Pollock, Alexander
Wolfson, Mark


Price, Sir David (Eastleigh)
Young, Sir George (Acton)


Proctor, K. Harvey



Raison, Timothy
Tellers for the Ayes:


Rathbone, Tim
Mr. Robert Boscawen and


Rees, Peter (Dover and Deal)
Lord James Douglas-


Renton, Tim
Hamilton.


Rhys Williams, Sir Brandon





NOES


Bennett, Andrew(St'kp't N)
Johnston, Russell (Inverness)


Buchan, Norman
Race, Reg


Campbell-Savours, Dale
Rooker, J. W.


Cocks, Rt Hon M. (B'stol S)
Wainwright, R.(Colne V)


Cryer, Bob
Welsh, Michael


Dobson, Frank
Winnick, David


Dormand, Jack



Field, Frank
Tellers for the Noes:


Harrison, Rt Hon Walter
Mr. Terry Davis and


Haynes, Frank
Mr. Hugh McCartney.

Question accordingly agreed to.

Clause 1 ordered to stand part of the Bill

Clause 2

ALTERATION OF TREASURY SUPPLEMENT TO CONTRIBUTIONS

Question put, That the clause stand part of the Bill:—

The Committee divided: Ayes 193, Noes 15.

Division No. 28]
[4.50 am


AYES


Alexander, Richard
Hastings, Stephen


Atkinson, David (B'm'th,E)
Hawkins, Paul


Baker, Nicholas (N Dorset)
Hawksley, Warren


Banks, Robert
Heddle, John


Bendall, Vivian
Henderson, Barry


Benyon, Thomas (A'don)
Hooson, Tom


Benyon, W. (Buckingham)
Howell, Ralph (N Norfolk)


Berry, Hon Anthony
Hunt, David (Wirral)


Best, Keith
Hunt, John (Ravensbourne)


Bevan, David Gilroy
Jenkin, Rt Hon Patrick


Biggs-Davison, John
Johnson Smith, Geoffrey


Blackburn, John
Jopling, Rt Hon Michael


Blaker, Peter
Kershaw, Anthony


Bottomley, Peter (W'wich W)
Knight, Mrs Jill


Bowden, Andrew
Lamont, Norman


Bright, Graham
Lang, Ian


Brinton, Tim
Latham, Michael


Brittan, Leon
Le Marchant, Spencer


Brooke, Hon Peter
Lennox-Boyd, Hon Mark


Brotherton, Michael
Lester Jim (Beeston)


Brown, M.(Brigg and Scun)
Lloyd, Peter (Fareham)


Browne, John (Winchester)
Loveridge, John


Bruce-Gardyne, John
Luce, Richard


Bryan, Sir Paul
Lyell, Nicholas


Buck, Antony
McCrindle, Robert


Budgen, Nick
MacGregor, John


Butcher, John
MacKay, John (Argyll)


Cadbury, Jocelyn
McNair-Wilson, P. (New F'st)


Carlisle, Kenneth (Lincoln)
McQuarrie, Albert


Chalker, Mrs. Lynda
Madel, David


Channon, Rt. Hon. Paul
Major, John


Churchill, W. S.
Marland, Paul


Clark, Hon A. (Plym'th, S'n)
Mates, Michael


Clarke, Kenneth (Rushcliffe)
Mather, Carol


Colvin, Michael
Maude, Rt Hon Angus


Cope, John
Mawhinney, Dr Brian


Corrie, John
Maxwell-Hyslop, Robin


Costain, Sir Albert
Mayhew, Patrick


Cranborne, Viscount
Mellor, David


Crouch, David
Meyer, Sir Anthony


Dean, Paul (North Somerset)
Miller, Hal (B'grove)


Dickens, Geoffrey
Mills, Iain (Meriden)


Dorrell, Stephen
Miscampbell, Norman


Dunn, Robert (Dartford)
Moate, Roger


Durant, Tony
Monro, Hector


Eggar, Tim
Montgomery, Fergus


Elliott, Sir William
Moore, John


Emery, Peter
Morrison, Hon C. (Devizes)


Eyre, Reginald
Morrison, Hon P. (Chester)


Faith, Mrs Sheila
Myles, David


Farr, John
Neale, Gerrard


Fell, Anthony
Needham, Richard


Fenner, Mrs Peggy
Nelson, Anthony


Forman, Nigel
Neubert, Michael


Fraser, Peter (South Angus)
Newton, Tony


Gardiner, George (Reigate)
Normanton, Tom


Gardner, Edward (S Fylde)
Onslow, Cranley


Garel-Jones, Tristan
Osborn, John


Goodhart, Philip
Page, Rt Hon Sir G. (Crosby)


Gorst, John
Page, Richard (SW Herts)


Grant, Anthony (Harrow C)
Parris, Matthew


Greenway, Harry
Patten, Christopher (Bath)


Grieve, Percy
Pattie, Geoffrey


Griffiths, E.(B'y St. Edm'ds)
Pawsey, James


Griffiths, Peter Portsm'th N)
Pink, R. Bonner


Hamilton, Hon A.
Pollock, Alexander


Hampson, Dr Keith
Price, Sir David (Eastleigh)


Hannam, John
Proctor, K. Harvey


Haselhurst, Alan
Raison, Timothy






Rathbone, Tim
Thorne, Neil (Ilford South)


Rees, Peter (Dover and Deal)
Townend, John (Bridlington)


Renton, Tim
Townsend, Cyril D, (B'heath)


Rhys Williams, Sir Brandon
Trippier, David


Ridsdale, Julian
Trotter, Neville


Sainsbury, Hon Timothy
van Straubenzee, W. R.


St. John-Stevas, Rt Hon N.
Viggers, Peter


Shaw, Michael (Scarborough)
Waddington, David


Shelton, William (Streatham)
Wakeham, John


Shepherd, Richard
Waldegrave, Hon William


Shersby, Michael
Walker, B. (Perth )


Silvester, Fred
Wall, Patrick


Sims, Roger
Waller, Gary


Smith, Dudley
Ward, John


Speller, Tony
Warren, Kenneth


Spence, John
Watson, John


Spicer, Jim (West Dorset)
Wells, John (Maidstone)


Sproat, Ian
Wells, Bowen


Squire, Robin
Wheeler, John


Stainton, Keith
Whitney, Raymond


Stanbrook, Ivor
Wickenden, Keith


Stevens, Martin
Wilkinson, John


Stewart, Ian (Hitchin)
Winterton, Nicholas


Stokes, John
Wolfson, Mark


Stradling Thomas, J.
Young, Sir George (Acton)


Tapsell, Peter



Taylor, Teddy (S'end E)
Tellers for the Ayes:


Tebbit, Norman
Lord James Douglas-


Thomas, Rt Hon Peter
Hamilton and


Thompson, Donald
Mr. Robert Boscawen.




NOES


Bennett, Andrew (St'kp't N)
Race, Reg


Buchan, Norman
Rooker, J. W.


Campbell-Savours, Dale
Wainwright, R.(Colne V)


Cocks, Rt Hon M. (B'stol S)
Welsh, Michael


Cryer, Bob
Winnick, David


Dobson, Frank



Dormand, Jack
Tellers for the Noes:


Field, Frank
Mr. Terry Davis and


Harrison, Rt Hon Walter
Mr. Hugh McCartney.


Haynes, Frank

Question accordingly agreed to.

Clause 2 ordered to stand part of the Bill.

Clause 3

ALLOCATION OF CLAUSES

Question proposed, That the clause stand part of the Bill.

5 am

Mr. Rooker: We wish only to ask about the order-making powers in subsection (4B). Is it right that there is no mechanism for changing the figures of 0·1, 4 and 0·2 per cent by order? If it is desired to change them, will it require primary legislation? Are the figures cumulative if used under subsection (4A)? In other words could the figure be 0·1 per cent. one year and change the following year?

The Under-secretary of State for Health and Social Security (Sir George Young): The answer to the hon. Gentleman's second question is "Yes", the figures could be used cumulatively. We have made no decision on the rate of contribution for any years after 1981–82, so we cannot say in what circumstances the powers in clause 3(3) will be used. The subsection merely corrects an anomaly in section 122 of the principal Act. At the moment, one can only vary the NHS contributions as a consequence of changes in the national insurance contribution rates and

limits. The purpose of the power is simply to provide flexibility to change the NHS contributions independently of the national insurance contribution rates.

Mr. Cryer: Can the Minister confirm that the power to carry out the alterations which is contained in clause 4(5) will be by an affirmative order? I understand that that brings into operation part of the principal legislation which requires that any changes will be by affirmative order and not by negative procedure.

Sir George Young: I confirm that that is the case.

Mr. Race: Will the Minister answer the question raised by my hon. Friend the Member for Birmingham, Perry Barr (Mr. Rooker) about whether the 0·1 per cent, could be changed by order to 0·2 per cent., or 0·3 per cent. or whatever? Can this be done by affirmative order, as mentioned by my hon. Friend the Member for Keighley (Mr. Cryer), or will it need primary legislation.

Sir George Young: One can change the figure by 0·1 per cent, by order. If one wants to change it by more than 0·1 per cent., it will need legislation.

Question put, That the clause stand part of the Bill:—

The Committee divided: Ayes 193, Noes 16.

Division No. 29]
[5.04 am


AYES


Alexander, Richard
Eyre, Reginald


Atkinson, David (B'm'th,E)
Faith, Mrs Sheila


Baker, Nicholas (N Dorset)
Farr, John


Banks, Robert
Fell, Anthony


Bendall, Vivian
Fenner, Mrs Peggy


Benyon, Thomas (A'don)
Forman, Nigel


Benyon, W. (Buckingham)
Fraser, Peter (South Angus)


Berry, Hon Anthony
Gardiner, George (Reigate)


Best, Keith
Gardner, Edward (S Fylde)


Bevan, David Gilroy
Garel-Jones, Tristan


Biggs-Davison, John
Goodhart, Philip


Blackburn, John
Gorst, John


Blaker, Peter
Grant, Anthony (Harrow C)


Boscawen, Hon Robert
Greenway, Harry


Bottomley, Peter (W'wich W)
Grieve, Percy


Bowden, Andrew
Griffiths, E.(B'y St. Edm'ds)


Bright, Graham
Griffiths, Peter Portsm'th N)


Brinton, Tim
Gummer, John Selwyn


Brittan, Leon
Hamilton, Hon A.


Brooke, Hon Peter
Hampson, Dr Keith


Brotherton, Michael
Hannam, John


Brown, M.(Brigg and Scun)
Haselhurst, Alan


Browne, John (Winchester)
Hastings, Stephen


Bruce-Gardyne, John
Hawkins, Paul


Bryan, Sir Paul
Hawksley, Warren


Buck, Antony
Heddle, John


Budgen, Nick
Henderson, Barry


Butcher, John
Hooson, Tom


Cadbury, Jocelyn
Howell, Ralph (N Norfolk)


Carlisle, Kenneth (Lincoln)
Hunt, David (Wirral)


Chalker, Mrs. Lynda
Hunt, John (Ravensbourne)


Channon, Rt. Hon. Paul
Jenkin, Rt Hon Patrick


Churchill, W. S.
Johnson Smith, Geoffrey


Clark, Hon A. (Plym'th, S'n)
Jopling, Rt Hon Michael


Clarke, Kenneth (Rushcliffe)
Kershaw, Anthony


Colvin, Michael
Knight, Mrs Jill


Cope, John
Lamont, Norman


Corrie, John
Lang, Ian


Costain, Sir Albert
Latham, Michael


Cranborne, Viscount
Le Marchant, Spencer


Crouch, David
Lennox-Boyd, Hon Mark


Dean, Paul (North Somerset)
Lester Jim (Beeston)


Dickens, Geoffrey
Lloyd, Peter (Fareham)


Dorrell, Stephen
Loveridge, John


Dunn, Robert (Dartford)
Luce, Richard


Durant, Tony
Lyell, Nicholas


Eggar, Tim
McCrindle, Robert


Elliott, Sir William
MacGregor, John


Emery, Peter
MacKay, John (Argyll)






McNair-Wilson, P. (New F'st)
Shepherd, Richard


McQuarrie, Albert
Shersby, Michael


Madel, David
Silvester, Fred


Major, John
Sims, Roger


Marland, Paul
Smith, Dudley


Mates, Michael
Speller, Tony


Mather, Carol
Spence, John


Maude, Rt Hon Angus
Spicer, Jim (West Dorset)


Mawhinney, Dr Brian
Sproat, Ian


Maxwell-Hyslop, Robin
Squire, Robin


Mellor, David
Stainton, Keith


Meyer, Sir Anthony
Stanbrook, Ivor


Miller, Hal (B'grove)
Stevens, Martin


Mills, Iain (Meriden)
Stewart, Ian (Hitchin)


Mills, Peter (West Devon)
Stokes, John


Miscampbell, Norman
Stradling Thomas, J.


Moate, Roger
Tapsell, Peter


Montgomery, Fergus
Taylor, Teddy (S'end E)


Moore, John
Tebbit, Norman


Morrison, Hon C. (Devizes)
Thomas, Rt Hon Peter


Morrison, Hon P. (Chester)
Thompson, Donald


Myles, David
Thorne, Neil (Ilford South)


Neale, Gerrard
Townend, John (Bridlington)


Needham, Richard
Townsend, Cyril D, (B'heath)


Nelson, Anthony
Trippier, David


Neubert, Michael
Trotter, Neville


Newton, Tony
van Straubenzee, W. R.


Normanton, Tom
Viggers, Peter


Onslow, Cranley
Waddington, David


Osborn, John
Waldegrave, Hon William


Page, Rt Hon Sir G. (Crosby)
Walker, B. (Perth )


Page, Richard (SW Herts)
Wall, Patrick


Parris, Matthew
Waller, Gary


Patten, Christopher (Bath)
Ward, John


Pattie, Geoffrey
Warren, Kenneth


Pawsey, James
Watson, John


Pink, R. Bonner
Wells, John (Maidstone)


Pollock, Alexander
Wells, Bowen


Price, Sir David (Eastleigh)
Wheeler, John


Proctor, K. Harvey
Whitney, Raymond


Raison, Timothy
Wickenden, Keith


Rathbone, Tim
Wilkinson, John


Rees, Peter (Dover and Deal)
Winterton, Nicholas


Renton, Tim
Wolfson, Mark


Rhys Williams, Sir Brandon
Young, Sir George (Acton)


Ridsdale, Julian



Sainsbury, Hon Timothy
Tellers for the Ayes:


St. John-Stevas, Rt Hon N.
Lord James Douglas-


Shaw, Michael (Scarborough)
Hamilton and


Shelton, William (Streatham)
Mr. John Wakeham.




NOES


Bennett, Andrew (St'kp't N)
Johnston, Russell (Inverness)


Buchan, Norman
Race, Reg


Campbell-Savours, Dale
Rooker, J. W.


Cocks, Rt Hon M. (B'stol S)
Wainwright, R.(Colne V)


Cryer, Bob
Welsh, Michael


Davis, T. (B'ham, Stechf'd)
Winnick, David


Dobson, Frank



Dormand, Jack
Tellers for the Noes:


Field, Frank
Mr. Walter Harrison and


Haynes, Frank
Mr. Hugh McCartney.

Question accordingly agreed to.

Clause 3 ordered to stand part of the Bill.

Clause 4

SUPPLEMENTAL

Question put, That the clause stand part of the Bill:—

The Committee divide: Ayes 193, Noes 15.

Division No. 30]
[5.14 am


AYES


Alexander, Richard
Banks, Robert


Atkinson, David (B'm'th,E)
Bendall, Vivian


Baker, Nicholas (N Dorset)
Benyon, Thomas (A'don)





Benyon, W. (Buckingham)
Lang, Ian


Berry, Hon Anthony
Latham, Michael


Best, Keith
Le Marchant, Spencer


Bevan, David Gilroy
Lennox-Boyd, Hon Mark


Biggs-Davison, John
Lester Jim (Beeston)


Blackburn, John
Lloyd, Peter (Fareham)


Blaker, Peter
Loveridge, John


Boscawen, Hon Robert
Luce, Richard


Bottomley, Peter (W'wich W)
Lyell, Nicholas


Bowden, Andrew
McCrindle, Robert


Bright, Graham
MacKay, John (Argyll)


Brinton, Tim
McNair-Wilson, P. (New F'st)


Brittan, Leon
McQuarrie, Albert


Brooke, Hon Peter
Madel, David


Brotherton, Michael
Marland, Paul


Brown, M.(Brigg and Scun)
Mates, Michael


Browne, John (Winchester)
Mather, Carol


Bruce-Gardyne, John
Maude, Rt Hon Angus


Bryan, Sir Paul
Mawhinney, Dr Brian


Buck, Antony
Maxwell-Hyslop, Robin


Budgen, Nick
Mayhew, Patrick


Butcher, John
Mellor, David


Cad bury, Jocelyn
Meyer, Sir Anthony


Carlisle, Kenneth (Lincoln)
Miller, Hal (B'grove)


Chalker, Mrs. Lynda
Mills, Iain (Meriden)


Channon, Rt. Hon. Paul
Mills, Peter (West Devon)


Churchill, W. S.
Miscampbell, Norman


Clark, Hon A. (Plym'th, S'n)
Moate, Roger


Clarke, Kenneth (Rushcliffe)
Montgomery, Fergus


Colvin, Michael
Morrison, Hon C. (Devizes)


Cope, John
Morrison, Hon P. (Chester)


Corrie, John
Myles, David


Costain, Sir Albert
Neale, Gerrard


Cranborne, Viscount
Needham, Richard


Crouch, David
Nelson, Anthony


Dean, Paul (North Somerset)
Neubert, Michael


Dickens, Geoffrey
Normanton, Tom


Dorrell, Stephen
Onslow, Cranley


Douglas-Hamilton, Lord J.
Osborn, John


Dunn, Robert (Dartford)
Page, Rt Hon Sir G. (Crosby)


Durant, Tony
Page, Richard (SW Herts)


Eggar, Tim
Parris, Matthew


Elliott, Sir William
Patten, Christopher (Bath)


Emery, Peter
Pattie, Geoffrey


Eyre, Reginald
Pawsey, James


Faith, Mrs Sheila
Pink, R. Bonner


Farr, John
Pollock, Alexander


Fell, Anthony
Price, Sir David (Eastleigh)


Fenner, Mrs Peggy
Proctor, K. Harvey


Forman, Nigel
Raison, Timothy


Fraser, Peter (South Angus)
Rathbone, Tim


Gardiner, George (Reigate)
Rees, Peter (Dover and Deal)


Gardner, Edward (S Fylde)
Renton, Tim


Garel-Jones, Tristan
Rhys Williams, Sir Brandon


Goodhart, Philip
Ridsdale, Julian


Gorst, John
Sainsbury, Hon Timothy


Grant, Anthony (Harrow C)
St. John-Stevas, Rt Hon N.


Greenway, Harry
Shaw, Michael (Scarborough)


Grieve, Percy
Shelton, William (Streatham)


Griffiths, E.(B'y St. Edm'ds)
Shepherd, Richard


Griffiths, Peter Portsm'th N)
Shersby, Michael


Gummer, John Selwyn
Silvester, Fred


Hamilton, Hon A.
Sims, Roger


Hampson, Dr Keith
Smith, Dudley


Hannam, John
Speller, Tony


Haselhurst, Alan
Spence, John


Hawkins, Paul
Spicer, Jim (West Dorset)


Hawksley, Warren
Sproat, Ian


Heddle, John
Squire, Robin


Henderson, Barry
Stainton, Keith


Hooson, Tom
Stanbrook, Ivor


Howell, Ralph (N Norfolk)
Stevens, Martin


Hunt, David (Wirral)
Stewart, Ian (Hitchin)


Hunt, John (Ravensbourne)
Stokes, John


Jenkin, Rt Hon Patrick
Stradling Thomas, J.


Johnson Smith, Geoffrey
Tapsell, Peter


Jopling, Rt Hon Michael
Taylor, Teddy (S'end E)


Kershaw, Anthony
Tebbit, Norman


Knight, Mrs Jill
Thomas, Rt Hon Peter


Lamont, Norman
Thompson, Donald






Thorne, Neil (Ilford South)
Watson, John


Townend, John (Bridlington)
Wells, John (Maidstone)


Townsend, Cyril D, (B'heath)
Wells, Bowen


Trippier, David
Wheeler, John


Trotter, Neville
Whitney, Raymond


Wan Straubenzee, W. R.
Wickenden, Keith


viggers, Peter
Wilkinson, John


Waddington, David
Winterton, Nicholas


Wakeham, John
Wolfson, Mark


Waldegrave, Hon William
Young, Sir George (Acton)


Walker, B. (Perth )



Wall, Patrick
Tellers for the Ayes:


Waller, Gary
Mr. John MacGregor and


Ward, John
Mr. Tony Newton.


Warren, Kenneth





NOES


Bennett, Andrew(St'kp't N)
Race, Reg


Buchan, Norman
Rooker, J. W.


Campbell-Savours, Dale
Wainwright, R.(Colne V)


Cocks, Rt Hon M. (B'stol S)
Welsh, Michael


Cryer, Bob
Winnick, David


Davis, T. (B'ham, Stechf'd)



Dobson, Frank
Tellers for the Noes:


Dormand, Jack
Mr. Walter Harrison and


Field, Frank
Mr. Hugh McCartney.


Haynes, Frank

Question accordingly agreed to.

Clause 4 ordered to stand part of the Bill.

Clause 5 ordered to stand part of the Bill.

New Clause 3

AMENDMENT OF PRINCIPAL ACT (NO.2)

'In section 4(6) of the principal Act, with effect from the tax year 1981–82, after the word "as" there shall be inserted the words "exceeds the current lower earnings limit and".'.—[Mr. Rooker.]

Brought up, and read the First time.

Mr. Rooker: I beg to move, That the clause be read a Second time.
The effect of the clause has basically been debated throughout the debates on most of the other amendments, certainly those to clause 1. What we are seeking to do is to put into practice what many of us have advocated, namely, that a person should not pay the national insurance contribution on earnings that are less than the lower earnings limit. In other words, we want there to be a national insurance threshold in the same way as there is a tax threshold.
We admit that we do not know how much the new clause would cost. We suspect that it would be a substantial amount, but we have had no time effectively to cost it, because of the way in which the Bill is being bounced through the House of Commons. [HON. MEMBERS: "A week."] No. It may be that the Bill has been in print for more than a week, but the Government secured the Second Reading of the Bill only on Monday. There has not been much time to consider what new clauses should be tabled.
We believe that there is a case to be made for looking it the upper and lower earnings limits anyway. By implication, we have not quite tied ourselves to the complete abolition of the upper earnings limit We want to review the whole system. As regards low-paid workers, there is a substantial case for having a national insurance threshold. We cannot see anything technically defective in that method of proceeding. It would require a simple form of words to be inserted into the principal Act.

Mr. Andrew F. Bennett: We on this side had hoped for some short comments from the Minister.

Mr. Patrick Jenkin: Mr. Patrick Jenkin rose—

Mr. Bennett: If the Minister wishes to speak, I will give way and will seek to intervene later.

Mr. Jenkin: I had thought that it might be for the convenience of the Committee if I heard the Opposition arguments first, but if it will be helpful for me to state the Government's views on the clause I am happy to do so.
I must tell the hon. Member for Birmingham, Perry Barr (Mr. Rooker) that, with the possible exception of amendment No. 5, which would have renewed the entire revenue-raising function, this is by far the most momentous amendment tabled by the Opposition. It would have the effect of reducing the employee contributions by £1.7 billion, the employer contributions by £2.5 billion and the employer surcharge by £800 million. I make that a sum of about £4 billion. We shall be interested to see whether the Opposition vote in favour of their clause.
What the Opposition have not recognised is that this first slice of income on which contributions is paid by anyone whose income is higher than the lower earnings limit is absolutely crucial to the whole structure of the 1975 pension scheme and is the basis on which agreement was reached with the occupational pension interests.
Perhaps I should explain to the Committee why this is so. The Committee will remember that it was agreed in 1975 that the scheme would remain contributory and that people would receive benefits and pensions in return for their contributions. The basis of the new scheme was that the retirement pension would consist of two elements. First, there would be 100 per cent, replacement of income for the first slice of earnings. That was up to the lower earnings limit. Then, for income above the lower earnings limit, there would be a 25 per cent, replacement once the scheme had become fully mature, once one had the full 20 years of contributions. That would apply to earnings lying between the lower and the upper earnings limits. Nevertheless, contributions were to be levied at a uniform rate on all earnings up to the upper earnings limit. That was the basis on which the scheme was constructed.
Thus pensioners will get a very good return on the contributions paid on the first slice of earnings and a less good return on the rest of their contributions. It was for that reason that it became so much more important after 1975 to ensure that as many people as possible had an opportunity to ensure that their contribution records, up to the lower earnings limit, were as complete as possible. That was an important part of their entitlement.
5.30 am
It was for that reason that credits were introduced for sickness and unemployment. In addition, the home responsibility protection was put in to ensure that people who had interrrupted work would still qualify for a full pension. Contributors were given the opportunity to pay voluntary class 3 contributions to repair gaps in their contribution records. All of that was to ensure that emphasis was placed on the need to secure a full record of contributions in respect of the lowest slice of earnings, the very slice that the new clause seeks to remove from contribution liability. For the slice of earnings between the lower and upper earnings limit, pension return was to be


strictly contribution-related, and there was to be no help by way of credits, home responsibility protection, class 3 and so on.
The back-up for ensuring that as many people as possible qualify for the basic pension—based on contribution records—is linked to that first slice of income. It goes right to the heart of the second pension scheme and to the arrangements negotiated and agreed with the occupational pension interests outside. If the Opposition are hooked on trying to exempt that first slice of income, the entire scheme will have to go back to the drawing board. The whole shooting match will have to be renegotiated.
The hon. Member for Renfrewshire, West (Mr. Buchan) will discover, as he becomes acquainted with pensions interests outside, that the last thing they want is to see that concordat upset. After "ping-pong pensioneering" from Boyd-Carpenter to Crossman, from Crossman to Joseph and from Joseph to Castle, the Howe-O'Malley concordat was reached. They want to stick with that. The new clause would destroy its basis. In addition to costing £4 billion, it would destroy the basis of the 1975 scheme. I cannot recommend my hon. Friends to do that.

Mr. Race: There is no reason why the House should not agree to £4 billion of reflation. Conservative Members may believe that it would be damaging to increase the public sector borrowing requirement by that amount. My hon. Friends and I do not. We want the economy to expand and unemployment to fall. To do that, one could increase public expenditure. The Secretary of State's argument to the effect that we cannot afford £4 billion does not stand up.
One must consider the differences between the national insurance scheme and income tax. Why on earth is tax not paid on income below the tax threshold when under the national insurance scheme there is an impost on income below £27·50 a week? That is an unjustified impost on the lowest paid. We must find a way of protecting the pensions of those who are part-time workers. They pay a substantial marginal national insurance rate once they earn £27·50 per week. If the pensions system is based on people being discriminated against in that unjustified way, it ought to be changed. There ought to be a method of dealing with it during this Parliament.
I believe that the new clause is correct in identifying this as a problem to be rectified. Many low-paid workers who are seriously affected by this form of taxation, whereby they pay national insurance contributions on anything below £27 a week, will welcome any attempt by Parliament to review that situation, especially as many more people will be brought into that position by virtue of the freezing of the lower threshold.
For those reasons, the new clause is entirely justified. I hope that we shall vote for it.

Mr. Andrew F. Bennett: The Secretary of State seems to think that the so-called concordat or agreement that he made can be infinitely varied and yet still hold good. Having broken the earnings link with pensions and having in the Bill started to put in extra expenses for the National Health Service and on cutting back the Treasury supplement, he is altering the rules and the agreement. If

he is changing matters in that way, it seems reasonable for us to insist on making this form of taxation not regressive, as it is now, but more progressive.
Clearly, there will be much argument on this issue in the future. We now have an extremely regressive tax. Introducing an allowance or pushing back a lot of expenditure into the income tax system rather than the national insurance system is the only way to make the system more progressive and less regressive.
Therefore, I hope that, as an indication of our feeling that the national insurance system is particularly regressive, we shall vote for the new clause. We are dissatisfied with the present system. We want a change. We do not accept that the concordat that was made has any value now because of the way that the Government have torn so many holes in it.

Mr. Rooker: When moving the new clause, I said that I suspected that the cost was high. I still think that I should not put my figure on record. However, I can correct the Secretary of State's arithmetic. The figure is £5 billion, not £4 billion. My record shows that I have been prepared to put my hand into the taxpayer's, or the Government's pocket, for large sums. In this instance the sum is £5 billion.
I accept the point made by my hon. Friends that the fact that earnings up to the lower earnings limit pull in £5 billion show the unfairness in the system. In our own defence, because the wisdom of the Chair cannot be challenged, I must say that one of our intentions was to move new clause 2. One of our arguments would have been that one would basically pay for the other. But we could not do the costing in the time that the Government made available to the Committee.
Because it is not possible for the Opposition to put on record their support for a proposal such as that in the new clause 2 as the other side of the equation, I have to advise my hon. Friends that we would be putting our heads in a noose, and that we would regret. [Interruption.] What is wrong with that? It is all very well for the Conservative Members to come into the Chamber at 5·39 a.m. This is a debating Chamber. We have been seeking information during the past 13 hours, some of which has been satisfactory and some of which has not.
Given the fact that we cannot put the other side of the equation on record, I must advise my hon. Friends not to vote for the new clause. However, before Conservative Members pooh-pooh that fact, I should point out that the sum involved is the mythical surplus in the national insurance fund. It is of that sort of scale. It represents one-third of a year's outgoings in respect of the national insurance fund. It is roughly the same sum as the Government handed to the well-off within three or four weeks of taking office. A total of £5 billion is an enormous sum which people find difficult to comprehend. The fact remains that about £4·5 billion was handed out to the well-off.
However, as we cannot put the other side of the equation on the record, I beg to ask leave to withdraw the motion.

Motion and clause, by leave, withdrawn.

Bill reported, without amendment.

Mr. Patrick Jenkin: I beg to move, That the Bill be now read the Third time.

Question put:—

The House divided: Ayes 191, Noes 15.

Division No. 31]
[5.43 am


AYES


Alexander, Richard
Jenkin, Rt Hon Patrick


Atkinson, David (B'm'th,E)
Johnson Smith, Geoffrey


Baker, Nicholas (N Dorset)
Kershaw, Anthony


Banks, Robert
Knight, Mrs Jill


Bendall, Vivian
Lamont, Norman


Benyon, Thomas (A'don)
Lang, Ian


Benyon, W. (Buckingham)
Latham, Michael


Best, Keith
Le Marchant, Spencer


Bevan, David Gilroy
Lennox-Boyd, Hon Mark


Biggs-Davison, John
Lester Jim (Beeston)


Blackburn, John
Lloyd, Peter (Fareham)


Blaker, Peter
Loveridge, John


Boscawen, Hon Robert
Luce, Richard


Bottomley, Peter (W'wich W)
Lyell, Nicholas


Bowden, Andrew
McCrindle, Robert


Bright, Graham
MacGregor, John


Brinton, Tim
MacKay, John (Argyll)


Brittan, Leon
McNair-Wilson, P. (New F'st)


Brooke, Hon Peter
McQuarrie, Albert


Brotherton, Michael
Madel, David


Brown, M.(Brigg and Scun)
Major, John


Browne, John (Winchester)
Marland, Paul


Bruce-Gardyne, John
Maues, Michael


Bryan, Sir Paul
Mather, Carol


Buck, Antony
Maude, Rt Hon Angus


Budgen, Nick
Mawhinney, Dr Brian


Butcher, John
Maxwell-Hyslop, Robin


Cadbury, Jocelyn
Mayhew, Patrick


Carlisle, Kenneth (Lincoln)
Mellor, David


Chalker, Mrs. Lynda
Meyer, Sir Anthony


Channon, Rt. Hon. Paul
Miller, Hal (B'grove)


Churchill, W. S.
Mills, Iain (Meriden)


Clark, Hon A. (Plym'th, S'n)
Mills, Peter (West Devon)


Colvin, Michael
Miscampbell, Norman


Cope, John
Moate, Roger


Corrie, John
Montgomery, Fergus


Costain, Sir Albert
Moore, John


Cranborne, Viscount
Morrison, Hon C. (Devizes)


Crouch, David
Morrison, Hon P. (Chester)


Dean, Paul (North Somerset)
Myles, David


Dickens, Geoffrey
Neale, Gerrard


Dorrell, Stephen
Needham, Richard


Douglas-Hamilton, Lord J.
Nelson, Anthony


Dunn, Robert (Dartford)
Neubert, Michael


Durant, Tony
Newton, Tony


Eggar, Tim
Normanton, Tom


Elliott, Sir William
Onslow, Cranley


Emery, Peter
Osborn, John


Eyre, Reginald
Page, Rt Hon Sir G. (Crosby)


Faith, Mrs Sheila
Page, Richard (SW Herts)


Farr, John
Parris, Matthew


Fell, Anthony
Patten, Christopher (Bath)


Fenner, Mrs Peggy
Pattie, Geoffrey


Fraser, Peter (South Angus)
Pawsey, James


Gardiner, George (Reigate)
Pink, R. Bonner


Gardner, Edward (S Fylde)
Price, Sir David (Eastleigh)


Garel-Jones, Tristan
Proctor, K. Harvey


Goodhart, Philip
Raison, Timothy


Gorst, John
Rathbone, Tim


Grant, Anthony (Harrow C)
Rees, Peter (Dover and Deal)


Greenway, Harry
Renton, Tim


Grieve, Percy
Rhys Williams, Sir Brandon


Griffiths, E.(B'y St. Edm'ds)
Ridsdale, Julian


Griffiths, Peter Portsm'th N)
Sainsbury, Hon Timothy


Gummer John Selwyn
St. John-Stevas, Rt Hon N.


Hamilton, Hon A.
Shaw, Michael (Scarborough)


Hampson, Dr Keith
Shelton, William (Streatham)


Hannam, John
Shepherd, Richard


Haselhurst, Alan
Shersby, Michael


Hawkins, Paul
Silvester, Fred


Hawksley, Warren
Sims, Roger


Heddle, John
Smith, Dudley


Henderson, Barry
Speller, Tony


Hooson, Tom
Spence, John


Howell, Ralph (N Norfolk)
Spicer, Jim (West Dorset)


Hunt, David (Wirral)
Sproat, Ian


Hunt, John (Ravensbourne)
Squire, Robin





Stainton, Keith
Walker, B. (Perth )


Stanbrook, Ivor
Wall, Patrick


Stevens, Martin
Waller, Gary


Stewart, Ian (Hitchin)
Ward, John


Stokes, John
Warren, Kenneth


Tapsell, Peter
Watson, John


Taylor, Teddy (S'end E)
Wells, John (Maidstone)


Tebbit, Norman
Wells, Bowen


Thomas, Rt Hon Peter
Wheeler, John


Thompson, Donald
Whitney, Raymond


Thorne, Neil (Ilford South)
Wickenden, Keith


Townend, John (Bridlington)
Wilkinson, John


Townsend, Cyril D, (B'heath)
Winterton, Nicholas


Trippier, David
Wolfson, Mark


Trotter, Neville
Young, Sir George (Acton)


van Straubenzee, W. R.



Viggers, Peter
Tellers for the Ayes:


Waddington, David
Mr. John Stradling Thomas


Wakeham, John
and Mr. Anthony Berry.


Waldegrave, Hon William





NOES


Bennett, Andrew(St'kp't N)
Race, Reg


Buchan, Norman
Rooker, J. W.


Campbell-Savours, Dale
Wainwright, R.(Colne V)


Cocks, Rt Hon M. (B'stol S)
Welsh, Michael


Cryer, Bob
Winnick, David


Davis, T. (B'ham, Stechf'd)



Dobson, Frank
Tellers for the Noes:


Dormand, Jack
Mr. Walter Harrison and


Field, Frank
Mr. Hugh McCartney.


Haynes, Frank

Question accordingly agreed to.

Bill read the Third time and passed.

Statutory Instruments, &c.

Mr. Deputy Speaker (Mr. Bernard Weatherill): In order to save the time of the House, I propose to put together the Questions on the five motions to approve statutory instruments.

Mr. Andrew F. Bennett: On a point of order, Mr. Deputy Speaker. May we have the Questions put separately?

Motion made, and Question put forthwith pursuant to Standing Order No. 73A (Standing Committee on Statutory Instruments, &amp;c).

DOUBLE TAXATION REIEF

That the draft Double Taxation Relief (Taxes on Estates of Deceased Persons and Inheritances and on Gifts) (Sweden) Order 1980, which was laid before this House on 24 November, be approved.—[Mr. Newton.]

The House divided: Ayes 154, Noes 6.

Division No. 32]
[5.53 am


AYES


Alexander, Richard
Buck, Antony


Baker, Nicholas (N Dorset)
Budgen, Nick


Banks, Robert
Butcher, John


Bendall, Vivian
Cadbury, Jocelyn


Berry, Hon Anthony
Carlisle, Kenneth (Lincoln)


Best, Keith
Chalker, Mrs. Lynda


Bevan, David Gilroy
Channon, Rt. Hon. Paul


Biggs-Davison, John
Churchill, W. S.


Blackburn, John
Cope, John


Blaker, Peter
Corrie, John


Boscawen, Hon Robert
Costain, Sir Albert


Bottomley, Peter (W'wich W)
Cranborne, Viscount


Bright, Graham
Crouch, David


Brittan, Leon
Dean, Paul (North Somerset)


Brooke, Hon Peter
Dorrell, Stephen


Brotherton, Michael
Douglas-Hamilton, Lord J.


Browne, John (Winchester)
Durant, Tony






Eggar, Tim
Newton, Tony


Elliott, Sir William
Normanton, Tom


Emery, Peter
Onslow, Cranley


Eyre, Reginald
Osborn, John


Faith, Mrs Sheila
Page, Rt Hon Sir G. (Crosby)


Farr, John
Page, Richard (SW Herts)


Fell, Anthony
Parris, Matthew


Fenner, Mrs Peggy
Patten, Christopher (Bath)


Forman, Nigel
Pawsey, James


Gardner, Edward (S Fylde)
Pink, R. Bonner


Garel-Jones, Tristan
Price, Sir David (Eastleigh)


Goodhart, Philip
Proctor, K. Harvey


Gorst, John
Rathbone, Tim


Grant, Anthony (Harrow C)
Rees, Peter (Dover and Deal)


Greenway, Harry
Renton, Tim


Grieve, Percy
Rhys Williams, Sir Brandon


Griffiths, Peter Portsm'th N)
Sainsbury, Hon Timothy


Gummer, John Selwyn
St. John-Stevas, Rt Hon N.


Hamilton, Hon A.
Shaw, Michael (Scarborough)


Hampson, Dr Keith
Shelton, William (Streatham)


Haselhurst, Alan
Shepherd, Richard


Hawkins, Paul
Silvester, Fred


Hawksley, Warren
Sims, Roger


Heddle, John
Speller, Tony


Henderson, Barry
Spence, John


Hooson, Tom
Spicer, Jim (West Dorset)


Howell, Ralph (N Norfolk)
Squire, Robin


Hunt, David (Wirral)
Stainton, Keith


Jenkin, Rt Hon Patrick
Stanbrook, Ivor


Johnson Smith, Geoffrey
Stevens, Martin


Jopling, Rt Hon Michael
Stewart, Ian (Hitchin)


Kershaw, Anthony
Stradling Thomas, J.


Lamont, Norman
Taylor, Teddy (S'end E)


Lang, Ian
Tebbit, Norman


Latham, Michael
Thomas, Rt Hon Peter


Lennox-Boyd, Hon Mark
Thompson, Donald


Lester Jim (Beeston)
Thorne, Neil (Ilford South)


Lloyd, Peter (Fareham)
Townsend, Cyril D, (B'heath)


Loveridge, John
Trippier, David


Luce, Richard
Trotter, Neville


Lyell, Nicholas
van Straubenzee, W. R.


MacGregor, John
Viggers, Peter


MacKay, John (Argyll)
Wainwright, R.(Colne V)


McNair-Wilson, P. (New F'st)
Wakeham, John


Madel, David
Waldegrave, Hon William


Marland, Paul
Walker, B. (Perth )


Mates, Michael
Waller, Gary


Mather, Carol
Warren, Kenneth


Mawhinney, Dr Brian
Watson, John


Maxwell-Hyslop, Robin
Wells, John (Maidstone)


Mayhew, Patrick
Wells, Bowen


Mellor, David
Wheeler, John


Meyer, Sir Anthony
Whitney, Raymond


Miller, Hal (B'grove)
Wickenden, Keith


Mills, Peter (West Devon)
Wilkinson, John


Montgomery, Fergus
Winterton, Nicholas


Moore, John
Wolfson, Mark


Morrison, Hon P. (Chester)
Young, Sir George (Acton)


Neale, Gerrard



Needham, Richard
Tellers for the Ayes:


Nelson, Anthony
Mr. Spencer Le Marchant and


Neubert, Michael
Mr. David Waddington.




NOES


Campbell-Savours, Dale
Winnick, David


Cryer, Bob



Dobson, Frank
Tellers for Noes:


McCartney, Hugh
Mr. Walter Harrison and


Race, Reg
Mr. Andrew F. Bennett

Question accordingly agreed to.

Mr. Deputy Speaker: Motion No. 3—

Mr. Peter Brooke: Motions Nos. 3 to 6 not moved, Sir.

Supplementary Benefit (School Leavers)

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Brooke.]

Mr. Richard Wainwright: The threatened damage to secondary education which I put to the House tonight will be nationwide. It is causing deep concern to teachers and careers officers in all parts of the country. The full impact on parents and pupils has been deliberately blunted up to now, for the very good reason of not deterring pupils preparing for their examinations. Unfortunately, this low key can no longer be maintained.
The cause of the trouble is the radical alteration in supplementary benefit rules for school leavers flowing from the Social Security Act 1980 and regulations made under it, applying from the end of the present school term. My case is that regulations which the Government have recently made can be unmade so as to restore the much more satisfactory previous position.
Until now, those who left school and signed on were immediately eligible for supplementary benefit. Likewise, child benefit ceased immediately on their leaving school. Under the drastically changed rules, supplementary benefit will not be available to school leavers until the nearest of three fixed days in each year, roughly corresponding with the end of school holidays. A pupil leaving at Christmas will be able to claim from the first Monday in January and an Easter school leaver will be able to claim on the first Monday after Easter Monday, but—and this is the mischief—a pupil staying on at school until May in order to sit CSE or GCE O-level examinations will not be able to claim benefit until the first Monday in September, and during this long period of delay child benefit will continue to be paid to the parents.
For a school leaver under 18 years of age living at home, the average net loss—namely, the lost supplementary benefit minus the continuing child benefit—will be, at the very least, more than £8 a week. In most cases it will be about £10·50. If the youngster is living away from home, his or her loss will be much greater. These figures mean that a 16-year-old who abandons examinations to leave at Easter will draw about £250 or more in supplementary benefit before his or her mates who stay on to take examinations can draw even a penny. If we take into account child benefit, which is paid not to the youngster but to the parent, the discrepancy becomes £159 at the very least. It is these serious sums that will obviously be a severe disincentive to some youngsters to stay at school to take examinations or even to prepare for them.
The group of youngsters most seriously affected will be the 40 per cent, of fifth formers old enough legally to leave school next Easter. It is expected that 327,000 pupils will be legally able to leave school in England at Easter next year. In 1979, which is the most recent year for which figures are available, only 14 per cent, of those entitled legally to leave at Easter actually did so. My fear—it is not mine alone as it is the fear of informed opinion throughout the relevant professions and is now almost unanimous opinion—is that next year the 14 per cent, will tragically grow. It is feared that when the deplorable facts are more widely known the percentage will grow seriously in the following year.
The new social security temptation will be added to the present attraction of leaving before examinations in order to get early into the desperate job queue and to have a first chance of YOP. The change comes at a most unsuitable time when modest examination qualifications probably seem to some school leavers not to provide much answer to unemployment. Equally, the change conies at this dreadful time when unemployment in the home will make it extremely difficult for many families to make the big financial sacrifice that will be called for to keep a child at school for examinations and when the child is unable to draw any supplementary benefit until September.
Within the schools, the damage will not be limited to the actual examination period or to children in their last few months at school. The Head Teachers' Association of the metropolitan borough of Kirklees describes the likely effect of these changes thus:
There is no doubt that the prospect of sitting important examinations at the end of the fifth year is a powerful motivation to secondary school pupils. In the light of this new regulation, however, it is likely that substantial numbers of pupils will not be sitting such examinations, and that they may know this for two or three years before they actually leave. The implications of this situation both for the progress of these young people and for the work of the schools generally can only be described as daunting.
It is said that under the previous rules supplementary benefit could be and sometimes was abused by youngsters signing on for the summer although firmly intending all the time to return to school in September and not really seeking work in a meaningful way. I am not hers to dispute that. However, that belongs, unfortunately, to a vanished age when full employment was rightly an objective of Governments and when young people did not have to panic about work opportunities after leaving school.
My case is that if there is any merit in the change it belongs to a time which has unfortunately gone. This change has been brought cut of a pigeon-hole at a most inappropriate moment.
The old regulations enabled the DHSS to recover benefits paid where there had been abuse if it was able to do so. In today's dreadful circumstances, it is much more likely that a youngster will genuinely be seeking work, probably desperately, in the summer. If he or she returns to school in September, it will be merely as an alternative to further prolonged unemployment.
There is also the question of GCE resits, which take place in the early part of the autumn term. A child who goes back for a GCE resit, which may be of great importance to his or her future career, and then leaves school having resat the examination in September will not be able to draw any benefit until the first Monday in January, which is another disincentive to taking worthwhile examinations.
Of course, cynics might wrongly allege that many fifth formers will leave at Easter anyway under today's grim conditions, irrespective of the benefit regulations. However, certainly on the evidence that has been made available to me—and I have had a good deal—that is not so. I cite, for instance, a typical comprehensive school in the Coins Valley constituency and give the figures of those who have left at Easter rather than staying on into the examination term. In 1978 only 10 out of 213 fifth form pupils who could have left at Easter did so. In 1979 it was 10 out of 231. In 1980 it was seven out of 213. That shows how anxious children and their parents are for them to take these examinations, as long as there is no manifest and serious financial discouragement.
I have heard it alleged—and this I find extremely difficult to understand, at any rate in West Yorkshire and Greater Manchester, where my constituency lies—that the summer months are not any good for job hunting anyway. The only possible grain of truth in that absurd and sweeping assumption is that perhaps apprenticeships tend to be recruited for in the autumn. Howev8r, unfortunately, in the North of England at any rate, the number of apprenticeships is dwindling rapidly. I entirely refute the general notion that the summer months are not suitable for job hunting. It is an out-of-date concept, if ever it had any serious validity.
These inhumane new regulations entirely ignore the very substantial cost nowadays of job hunting. A youngster going after a job has substantial fares to pay. He has to be properly dressed for the occasion, with an entirely different suit of clothes from the one that he or she wore at school. Then, it is important that visits are paid regularly to careers officers, which again require expensive fares.
I want to make it plain that my complaint is fully supported by at least the following bodies: the National Association of Head Teachers, the Society of Education Officers, the Institute of Careers Officers, the National Association of Probation Officers, the Assistant Masters and Mistresses Association, the well-known youth organisation Youth Aid and every secondary head teacher in the Colne Valley constituency. I have already mentioned the Kirklees Head Teachers' Association.
I wonder whether the Minister's constituency has made any representations on this point. I am also most anxious to know, and I am sure that the House will be, just what the extent was of the DHSS's careful consultations with educational interests and with the Department of Education and Science before the regulations were made. There is, I must confess, a prima facie suspicion that the old Whitehall insularity in which Departments do not readily take on board points from other Departments has prevailed in this case. I find it almost impossible to believe that the Department of Education and Science has willingly gone along with this backward step.
In the Standing Committee on the Bill, when the clause came up under which this regulation has been made, there was, unfortunately, no Liberal Member. However, the hon. Member for Stockport, North (Mr. Bennett) raised the matter. I must say that the Minister's arguments in Committee seem to me very thin. For instance, he stated:
These proposals, however unwelcome they may be to the Committee, also provide a welcome relief in the burden on staff.
That illustrates the futility of simply playing the numbers game with the Civil Service.
We all want to reduce the cost of bureaucracy, but playing the numbers game, talking of getting rid of a relatively few clerks at the cost of irrevocable damage to children's careers and the atmosphere of secondary schools, is entirely out of proportion. I register a further protest, as my party always has, against playing the numbers game with the Civil Service Reductions should be made in a much more scientific way.
These harsh regulations for leavers who stay on at school to sit examinations are unsoundly based, partly on the false idea that a person who has left school still regards school holiday periods as meaningful. That is quite unreal. Further, this mean device has been brought out of a Whitehall pigeon-hole at the worst and most inappropriate


time. Under conditions of full employment it might not have done anything like so much damage, but now the most disadvantaged young people will suffer and there will be a severe effect on motivation throughout secondary education.
I beg the Government at the least to take immediate action which is still open to them to prevent the change being made at the worst possible time for the welfare of children and for the well-being of our secondary schools.

The Under-Secretary of State for Health and Social Security (Mrs. Lynda Chalker): I am grateful to the hon. Member for Colne Valley (Mr. Wainwright) for raising the question of the deferment of school leavers' entitlement to supplementary benefit. My hon. Friend the Under-Secretary of State for Education and Science had hoped to be here. I hope that the hon. Member will appreciate why that was not possible. My hon. Friend will, however, examine the matter with me, and I shall come to that matter later. I am aware that this issue has caused some concern in the last couple of weeks—some of it rather alarmist in tone — and it is helpful to have the opportunity to put on record the background and reasoning behind the change.
The change was proposed originally in "Social Assistance", a consultative document prepared by a team of officials and published in July 1978 under the previous Government. Under the old arrangements, a school leaver could claim benefit immediately on leaving school provided he was then over 16. Reviewing the effect of this, the team noted that, notwithstanding changes in statutory school leaving arrangements, recruitment practices of employers and the holiday expectations of the young people themselves were as often as not based on the assumption of starting work in the autumn. Entitlement to benefit in the period between leaving school and the end of the next holiday period was out of phase with holiday and employment practices and, in addition, had a number of unwelcome consequences.
A heavy burden was placed on unemployment benefit and supplementary benefit offices at a time when the staff were already under considerable pressure—for example, in handling the uprating. It was a question not of saving posts but of other pressures in the offices at that time. Similarly, careers officers might have been hampered in their efforts to secure employment for those genuinely looking for work by also having to handle cases of people primarily using their services as an avenue to benefit. This tended to create an artificial picture of the extent of real unemployment amongst school leavers. Finally, there were temptations to abuse the system, as the hon. Member has recognised.
Benefit is, of course, payable only to those genuinely seeking work. Yet some young people quite genuinely do not know, since they are awaiting examination results, whether they have finally left school. And, less creditably, others might misrepresent their intentions in order to claim benefit.
"Social Assistance" received an extremely wide circulation. A number of outside educational interests were included on the distribution list, including the National Umion of Teachers, the National Association of

Head Teachers and the National Union of Students. The report's proposals were then the subject of extensive consultation.
The proposal attracted a great deal of attention—indeed, throughout its consideration this change has been well publicised. Views tended to polarise. Some saw the proposal as an issue of principle that young people should be eligible for an income of their own right; that attitude goes rather wider than the question of deferment of benefit for a set period. Interestingly, the views of careers officers, who work with young unemployed people, were almost equally divided for and against the proposal. Those who supported the proposal tended to suggest that the immediate availability of benefit acted as an inducement to leave school, undermined a young person's determination to get a job and hampered careers officers' attempts at securing a placement.

Mr. Richard Wainwright: Concerning the careers officers' views, will the Minister say whether the consultation was with the professional body of careers officers or simply with individual careers officers?

Mrs. Chalker: I fear that I must speak from memory. The official bodies—there are more than one—were consulted. Bearing in mind the volume of correspendence that I received from individual careers officers and teachers, I am sure that they, in turn, had circulated the information sent to them in "Social Assistance" to their membership. I received widely flung correspondence and representations. They came from individuals and through the various associations that represent them. If I am in any way in error, I shall write to the hon. Gentleman.
The Supplementary Benefits Commission, in its comments, concluded that it saw good reasons for making the change, provided that the interests of a number of special groups were safeguarded. It was particularly concerned that a young person's first encounter with the social security system might be in circumstances which encouraged him to misrepresent his intentions.
Following consideration of views on this and other changes—and it must be remembered that this change is just one of very many in the revised supplementary benefits scheme—the Government announced in a White Paper, Cmnd. 7773 published in November 1979, that they intended to proceed with the change recommended by the review team in "Social Assistance".
The change has been implemented by regulations through an interlocking amendment to the child benefit scheme, which extends entitlement to child benefit during the period of deferment, and a corresponding regulation dealing with entitlement in the revised, regulated supplememtary benefits scheme. But our intention to use regulations in that way has been put clearly on record in the House on a number of occasions. There is no validity in the suggestion that this has somehow been smuggled through by the back door. When introducing the Second Reading debate on 20 December 1979 on what is now the Social Security Act 1980, my right hon. Friend the Secretary of State made clear that the change would be implemented, and he reiterated the reasoning behind the change.
It was also discussed, as the hon. Gentleman said, in greater detail during the Bill's Committee stage on 19 February 1980 on an amendment tabled by the hon. Member for Stockport, North (Mr. Bennett). Indeed,


precisely the point on examinations was made on that ocasion and the educational implications were specifically raised. I remember the discussion well as it finished some time after five o'clock in the morning, which appears to be a regular habit. Since that occasion, the Government's intention to proceed has been reiterated on the record on a number of occasions—for example, in reply to the hon. Gentleman on 2 June: Hansard, Volume 985, column 551
I have explained the background at some length because it seemed to me light to emphasise the careful consideration that has been given to this change over the last two years or so, the widespread consultation and discussion that preceded it and the specific attention to the educational implications in the course of taking the decision.
What will be the position of future school leavers? The hon. Gentleman referred to the position since 24 November. A 16-year-old school leaver will not be able to get benefit in his own right until the first supplementary benefit pay day after either the first Monday in January, the Monday after Easter Monday or the first Monday in September, whichever of those three is the first to follow the date of leaving. For that period, the children will continue to be treated as dependent on their parents. But the deferment will not apply to a number of special groups that can claim benefit in their own right while still at school. That undertaking was given to the Supplementary Benefits Commission. Those groups are young people who have a child of their own, orphans who are not being cared for by a guardian or otherwise maintained, young people who are estranged from their parents and living away—a position mentioned by the hon. Gentleman—and pupils whose handicap is such that they would be unlikely to obtain employment in the foreseeable future were they to leave school. Nor will the deferment affect those who have reached 19 by the time they leave school. We have, therefore, protected the special groups whom the Supplementary Benefits Commission was concerned to safeguard.
Treating school leavers as dependent on their parents in the period of deferment has the further effect that their parents will continue to be entitled to social security dependency additions in the period of deferment, as well as continuing to receive child benefit in respect of the school leaver. This is important in relation to the accusation that the change is hitting those least able to cope with the expense of the extended responsibility for their child.
The fact is that a family which is already receiving supplementary benefit and which contains a 16-year-old school leaver does not lose out by the change. This is because the non-householder scale rate to which a 16-year-old would become entitled is the same amount of money—£13·10 a week—as the dependency addition that the parent of such a child has included in the assessment of needs for the purposes of supplementary benefit. That is to say, total income of a family already on supplementary benefit is unaffected by the change in the entitlement rules. The parents get what the young person is denied. We have, therefore, in implementing the change, taken care to protect the families most in need.
We are not convinced that pupils will choose to sacrifice their longer-term career interests for the sake of short-term financial gain. Of course, the Government would be most concerned if pupils were dissuaded from

entering CSE or GCE examinations in order to be eligible for short-term financial gain, but, as I have said, we do not expect this to be the case, and I am sure that teachers need no guidance from the centre about advising their pupils on the value of obtaining qualifications. I have consulted my colleagues in the Department of Education and Science. They, with us, will pay careful attention to the number of entries in different parts of the country for public examinations in 1981.
I recognise the concern that this change has aroused. If there appears subsequently to be clear evidence that the change has had major unwelcome consequences, of course the Government will be prepared to review the position. We would have to take into account the wider considerations that I want to come to quickly in weighing the advantages and disadvantages of any further change. But I can assure the House that, should the fears that have been expressed prove valid, we shall look again at the merits of the change.
I should like to put the changes in the wider social context. Too often, Governments are accused of examining issues in a narrow context, ignoring the wider social choices that are at stake. This change is, by contrast, a clear example of a Government balancing priorities on expenditure and coming to a decision on where the money available might be deployed most usefully. As I mentioned at the beginning of my speech, the proposal for change was just one in the wide-ranging report "Social Assistance". All discussions on the change have therefore to be set in the wider context. That has been a major task and it has entailed conscious decisions on the best use of money and staff time.
We have implemented the revised supplementary benefits scheme as a package, in which the cost of the improvements that we have been able to introduce is broadly balanced by the savings made elsewhere. I make no apology for that. Those who call for increased expenditure in this or that area ignore the reality of the total bill for the taxpayer that the accumulation of separate bids represents. Of course, the change we have made will save money. We expect there to be a net saving of some £4 millon a year after taking account of the increased child benefit cost. Some families will receive less assistance from the State than they might otherwise have done, but we have protected those most in need.
We have simplified many aspects of the supplementary benefit scheme which concern children. We now have three scale rates for children rather than five, with an enhanced benefit on the change over ages. We are offering more help to families with young children under the age of five. We have reduced from two years to one year the qualifying period for the higher-rate long-term benefit rates for claimants under pension age who are not required to register and be available for work. That will help disabled people and lone parents.
These were changes that we wanted to make, and those who have objected to the school leavers' changes have not suggested that we should go back upon them. But the improvements were bought at the price of savings elsewhere, and it seems to me that we exercised proper social priorities. Put simply, we believed that the money could be better used in other areas. The improvements that we made outweighed the disadvantages.
I repeat to the hon. Gentleman and to the House that should my colleagues at the Department of Education and Science, in their monitoring of what happens, find that


there are major welcome consequences of the type that the hon. Gentleman fears, the Government will be prepared to review the position. I think, however, that we have to bear in mind the weight of evidence on both sides of the case and see how we can bring together all the various opportunities for young people with the expanded youth opportuinites programme. We have to make sure that we

are doing the best and the right thing, and I hope that the considerations that will take place this year will enable us to come up with the right answer for this very difficult period for school leavers.
I appreciate the hon. Gentleman's courtesy in putting the debate over in the way that he has done.

Question put and agreed to.

Adjourned accordingly at twenty-nine minutes to Seven o'clock a.m.